Country risk premium
An addition for the risks of the jurisdiction the business operates in: legal, currency, sanctions, tax.
How to read the number
Makes companies from different countries comparable: an identical business is valued at different rates when it works in different legal environments.
When the metric lies
Double counting is the usual error: if country risk is already built into the cash flow forecast, adding a premium to the rate penalises the company twice.
Also known as: sovereign risk premium