The average market risk premium in the United States decreased slightly to *** 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 *** and *** 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 ** 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.

Graph and download economic data for Real Risk Premium (TENEXPCHAREARISPRE) from Jan 1982 to Jul 2025 about premium, real, and USA.

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 **** percent in that 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 2024, average market risk premiums in Germany stood at *** percent. MRP in Europe As of 2024, Germany had one of the ****** average market risk premium in Europe. At the same time, market risk premiums in Ukraine were almost ***** 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 2024. The risk free rate of investment in Germany was less than three percent as of 2024.

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 **** and *** 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 ****** 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 ****** 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.

With LSEG's StarMine Equity Risk Premium (ERP) model, gain transparent, high-quality ERP estimates for all major equity markets around the globe.

United States US: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data was reported at 3.186 % pa in 2016. This records a decrease from the previous number of 3.201 % pa for 2015. United States US: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data is updated yearly, averaging 2.868 % pa from Dec 1960 (Median) to 2016, with 57 observations. The data reached an all-time high of 4.793 % pa in 1981 and a record low of 0.587 % pa in 1965. United States US: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s United States – Table US.World Bank.WDI: Interest Rates. Risk premium on lending is the interest rate charged by banks on loans to private sector customers minus the 'risk free' treasury bill interest rate at which short-term government securities are issued or traded in the market. In some countries this spread may be negative, indicating that the market considers its best corporate clients to be lower risk than the government. The terms and conditions attached to lending rates differ by country, however, limiting their comparability.; ; International Monetary Fund, International Financial Statistics database.; ;

The average market risk premium used in Switzerland fluctuated between 2011 and 2024. As of 2024, the average market risk premium in Switzerland stood at *** percent.

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 **** percent in 2024. 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.

The average market risk premium in Canada was *** percent in 2024. This means investors demanded an extra *** 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.

The average market risk premium in South Africa increased to *** 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 *** 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.

Abstract (en): This paper develops a production-based asset pricing model with two types of agents and concentrated ownership of physical capital. A temporary but persistent "distribution shock" causes the income share of capital owners to fluctuate in a procyclical manner, consistent with US data. The concentrated ownership model significantly magnifies the equity risk premium relative to a representative-agent model because the capital owners' consumption is more-strongly linked to volatile dividends from equity. With a steady-state risk aversion coefficient around 4, the model delivers an unleveled equity premium of 3.9 percent relative to short-term bonds and a premium of 1.2 percent relative to long-term bonds. (JEL D31, E13, E25, E32, E44, G12)

The excess bond premium (EBP) is a measure of investor sentiment or risk appetite in the corporate bond market. A credit spread index can be decomposed into two components: a component that captures the systematic movements in default risk of individual firms and a residual component: the excess bond premium that represents variation in the average price of bearing exposure to US corporate credit risk, above and beyond the compensation for expected defaults. The EBP component of corporate bond credit spreads that is not directly attributable to expected default risk provides an effective measure of investor sentiment or risk appetite in the corporate bond market.

Graph and download economic data for Term Premium on a 10 Year Zero Coupon Bond (THREEFYTP10) from 1990-01-02 to 2025-08-01 about term premium, 10-year, bonds, and USA.

We identify Treasury supply shocks using auction data, interpreting changes in futures prices around announcements as shocks to expected supply. We isolate the component of futures price variations pertaining to U.S. Treasury announcements between 1998 and 2020. We study how supply affects financial markets through local projections, using shocks as instruments. We show that increases in Treasury supply cause an upward shift of the yield curve fueled partly by a higher term premium. Stock prices decline, volatility climbs and corporate bond yields increase. The risk premium rises, the equity premium falls, inflation expectations soar and the liquidity premium decreases.

The risk-free rate is a theoretical rate of return of an investment with zero risk. This rate represents the minimum interest an investor would expect from a risk-free investment over a period of time. It is important to remember that the risk-free rate is only theoretical, as all investments carry even the smallest of risks. A higher risk-free rate illustrates that even with a so-called "zero risk" investment, investors would want a higher return because of the countries associated investment risks. Average risk-free rate (RF) rate of investment and market risk premium As of 2024, Turkey had the ******* risk-free rate of the countries displayed, with **** percent among the European countries under observation. When it comes to the market risk premium, or the rate of return expected by investors over the risk that investments hold, Turkey displayed a higher market risk premium during the same period.
Investment in selected European countries Since 2017, both the risk-free rate and average market risk premium in Ukraine have been excessively high. Even more information on market risk premiums, average risk-free rates, and required return on equity in selected European countries can be found in the report on market investments in Europe.

Graph and download economic data for Moody's Seasoned Baa Corporate Bond Yield (BAA) from Jan 1919 to Jul 2025 about Baa, bonds, yield, corporate, interest rate, interest, rate, and USA.

This dataset compiles national-level municipal bond issuance and pricing statistics for the United States, sourced from the Securities Industry and Financial Markets Association (SIFMA). It includes time-series data on municipal bond issuance volumes, average yields, interest rates, and maturity structures, aggregated on a monthly and annual basis. The dataset provides critical macro-financial context for evaluating subnational debt trends, especially in the context of climate adaptation investments and fiscal resilience. In particular, it supports comparative analysis between local climate-related borrowing (e.g., FEMA-backed projects) and national municipal debt trends, serving as a benchmark for assessing changes in risk premiums, cost of capital, and investor behavior. This file was used to calibrate yield spreads in empirical models evaluating the market response to federally co-funded nature-based infrastructure.