The average market risk premium in the United States decreased slightly to 5.5 percent in 2023. This suggests that investors demand a slightly lower return for investments in that country, in exchange for the risk they are exposed to. This premium has hovered between 5.3 and 5.7 percent since 2011. What causes country-specific risk? Risk to investments come from two main sources. First, inflation causes an asset’s price to decrease in real terms. A 100 U.S. dollar investment with three percent inflation is only worth 97 U.S. dollars after one year. Investors are also interested in risks of project failure or non-performing loans. The unique U.S. context Analysts have historically considered the United States Treasury to be risk-free. This view has been shifting, but many advisors continue to use treasury yield rates as a risk-free rate. Given the fact that U.S. government securities are available at a variety of terms, this gives investment managers a range of tools for predicting future market developments.

This statistic illustrates the average market risk premium used for selected countries worldwide in 2024. The average market risk premium used in Turkey was the highest and reached a value of 16.5 percent in that year.

The average market risk premium in Canada was 5.2 percent in 2024. This means investors demanded an extra 5.2 Canadian dollars on a 100 Canadian dollar investment. This extra cost should compensate for the risk of an investment based in Canada. What causes risk? As far as country-specific factors are concerned, macroeconomic trends can cause risk. For example, the inflation rate in relation to other countries can change the relative value of an investment. Lower inflation in Canada could weaken the Canadian dollar, reducing the value of Canadian assets in terms of another currency, such as the euro or U.S. dollar. The Canadian context As a country, Canada has a fairly high national debt. Some economists point to this as an increased default risk, since debt servicing can become costly. However, most investors agree that Canada, as an advanced economy, is creditworthy and not at risk of defaulting. A better measure is to look at Canada’s risk premium in the context of interest rates from other countries. These deposit rates can be used as a baseline for the market risk premium of other countries, though they do not include all the factors that have been used to calculate this statistic.

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. There are three main concepts to MRP’s, including required market risk premiums, historical market risk premiums and expected market risk premiums.

United Kingdom shows little return for risk

Europe wide, Finland had one of the lowest MRP alongside Poland and Germany. Ukraine had average risk premiums of 22.7 percent in 2023. Having a lower market risk premium may seem bad, but for countries such as the UK and Germany where rates have been consistent for several years, it is because the market is stable as an environment for investment.

Risk free rates

Risk free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk free rates across Europe are relatively low.

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Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. There are three main concepts to MRP’s, including required market risk premiums, historical market risk premiums and expected market risk premiums. In 2024, average market risk premiums in Poland decreased from the previous year to reach 5.8 percent.

Greece and Ukraine with highest MRP in Europe  

In 2023, Poland was relatively well placed for average market risk premiums in Europe, compared to other countries. Countries with the highest MRP, and therefore of the highest investment risk included Ukraine and Russia. Poland's risk premiums reached 7.2 percent. Ukraine risk premiums averaged at 23 percent in 2023.

Risk free rates  

Risk-free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk-free rates across Europe (except for Turkey and Ukraine) were relatively low in 2023. The risk-free rate of investment in Poland was 6.1 percent as of 2023.

The average market risk premium in South Africa increased to 8.3 percent in 2024. Market premium risk represents the difference between return on equities and a risk-free investment, which is normally associated with short-term government bonds. For comparison, the U.S. market premium risk amounted to 5.5 percent in the same year. Risk-free rate Most analysts consider the U.S. treasury rate to be the risk-free rate for the term of their investment, assuming the United States government will not default. Just as consumers in the Unites States get a credit rating, agencies such as Standard & Poor’s rate countries’ credit risks. Using these data, analysts compute the country-specific default risk, which in turn has an influence on the value of risk-free rate. What influences the return on equities? The economic factors such as political stability in a country, inflation rate, level of indebtment, trade deficit and investments have an influence on the activities of companies and their valuation on the stock exchanges. Apart from the economic cycle, the company’s operations itself, which are reflected in the results published in the financial reports, can boost or diminish the stock returns.

Split into three categories (required, historical, expected), market risk premiums measure the rate of return investors expect on an investment over the risk that investment holds. In Europe, average market risk premiums (MRP) sit between five and ten percent.

Greece sees hike in MRP

Although it has a relatively high market risk premium, Greece has seen its rates significantly decrease since 2020. Greece also saw a higher than average return rate on risk free investments. The same correlation can be seen with Europe’s less risky countries for investment. With Germany seeing some of the lowest market risk premiums and risk free returns in Europe.

Required, historical and expected

Separating the three types of market risk premiums is straightforward. Required MRP’s differ between investors, as approaches to investment change and measure the rate of return needed for an investment to be made. Expected premiums look at the rate of return, and what they are calculated to come out as, while historical MRP’s look back over a period at the average rate of return that investors previously got in the past.

Risk premium on lending (lending rate minus treasury bill rate, %) in South Africa was reported at 3.5608 % in 2023, according to the World Bank collection of development indicators, compiled from officially recognized sources. South Africa - Risk premium on lending (prime rate minus treasury bill rate, %) - actual values, historical data, forecasts and projections were sourced from the World Bank on March of 2025.

The average market risk premium used in Ireland fluctuated between 2011 and 2023. As of 2023, the average market risk premium (MRP) in the country reached a value of 6.7 percent, an increase compared to the previous year.

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. Unfortunately for investors, this is unlikely to happen as average market risks increase due to the added risk of investment. There are three main concepts to MRP’s, including required market risk premiums, historical market risk premiums and expected market risk premiums. In 2024, average market risk premiums in Portugal decreased from the previous year to reach six percent. Greece and Turkey highest MRP in Europe In 2023, Portugal, compared to other European countries had a relatively higher market risk premium. Countries with the highest MRP and therefore of the highest investment risk included Turkey and Ukraine. At the other end of the scale was Switzerland, whose market risk premiums averaged half of those seen in Ukraine. Risk free rates Risk free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average market risk free rates in Europe (with some exceptions) were relatively low in 2023. The risk-free rate of investment in Portugal as of 2024 was 3.1 percent.

Average market risk premiums (MRP’s) in Sweden have fluctuated between 2011 and 2023. As of 2023, the average market risk premium in Sweden amounted to 5.7 percent. Compared to other countries in Europe, Sweden’s average MRP were relatively high. Similar countries included Hungary and Greece amongst others.

Required, historical and expected

Separating the three types of market risk premiums is straightforward. Required MRP’s differ between investors, as approaches to investment change and measure the rate of return needed for an investment to be made. Expected premiums look at the rate of return, and what they are calculated to come out as, while historical MRP’s look back over a period at the average rate of return that investors previously got in the past.

Risk free rates

Risk free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk free rates across Europe (with some exceptions) were relatively low in 2022. As of 2022, The average risk-free rate of investment in Sweden was roughly 1.4 percent.

This statistic illustrates the average market risk premium in Russia from 2011 to 2024. The average market risk premium in Russia reached a value of 10.5 percent in 2024.

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The average market risk premium used in Denmark fluctuated between 2011 and 2023. As of 2023, the market risk premium in the country reached a value of 6.2 percent, higher than the previous year.

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. There are three main concepts to MRP’s, including required market risk premiums, historical market risk premiums and expected market risk premiums. In 2023, average market risk premiums in Germany stood at 5.7 percent.

MRP in Europe

As of 2023, Germany had one of the lowest average market risk premium in Europe. At the same time, market risk premiums in Ukraine were almost twice as high due to the risk of investment involved.

Risk free rates

Risk free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk free rates across Europe were relatively low in 2022. The risk free rate of investment in Germany was less than one percent as of 2022.

Insurance: Current Risk not Issued: Housing Insurance in Market Policies Moneylender在2024-12达610,522.390BRL，相较于2024-11的-91,099.170BRL有所增长。Insurance: Current Risk not Issued: Housing Insurance in Market Policies Moneylender数据按月度更新，2013-12至2024-12期间平均值为16,908.620BRL，共133份观测结果。该数据的历史最高值出现于2014-02，达3,318,092.510BRL，而历史最低值则出现于2015-11，为-18,583,746.050BRL。CEIC提供的Insurance: Current Risk not Issued: Housing Insurance in Market Policies Moneylender数据处于定期更新的状态，数据来源于Superintendence of Private Insurance，数据归类于Brazil Premium Database的Insurance Sector – Table BR.RGB011: Premium: Current Risk not Issued。

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Canada 10Y Bond Yield was 3.16 percent on Wednesday March 26, according to over-the-counter interbank yield quotes for this government bond maturity. Canada 10-Year Government Bond Yield - values, historical data, forecasts and news - updated on March of 2025.