Market Risk Premium

Obtains the equity risk premium by country – the equity risk premium of a mature market plus a country risk premium, the country’s default spread scaled by the volatility of its equities relative to its bonds, following the approach popularized by Aswath Damodaran – which is widely used to calibrate country-specific costs of equity and discount rates in a multi-country setting.

In a cost of equity the premium is applied in one of two common ways: beta times the Total Equity Risk Premium, or beta times the mature market premium with the Country Risk Premium added on top. For a company that earns its revenue in several countries the premium is often weighted by where the revenue comes from rather than by where the company is listed.

Also known as: country risk premium, Damodaran equity risk premium.

Market Risk Premium in Python or via the MCP

Install the Finance Toolkit with:

pip install financetoolkit -U

Then call get_market_risk_premium as shown below.

from financetoolkit import Toolkit

toolkit = Toolkit(
    ["AMZN", "TSLA"],
    api_key="FINANCIAL_MODELING_PREP_KEY",
    start_date="2021-01-01",
    end_date="2025-12-31",
)

market_risk_premium = toolkit.get_market_risk_premium()

market_risk_premium.loc[
    ["United States", "Germany", "Japan", "Brazil", "India", "South Africa"],
    ["Country Risk Premium", "Total Equity Risk Premium"],
]

Or, after setting up the Finance Toolkit MCP, ask:

Which returns:

Parameters

get_market_risk_premium accepts the following parameters.

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