Home API Documentation Market Risk Premium API

Market Risk Premium API

Access the market risk premium for specific dates with the FMP Market Risk Premium API. Use this key financial metric to assess the additional return expected from investing in the stock market over a risk-free investment.

About Market Risk Premium API

The FMP Market Risk Premium API provides the market risk premium, a critical measure in financial analysis and investment decision-making. This metric represents the difference between the expected return of the stock market and the risk-free rate, and it is essential for:

Investment Valuation: The market risk premium is a fundamental component in calculating the cost of equity and assessing the value of investments. By knowing the premium, investors can evaluate whether the potential return on an investment justifies the risk.
Risk Assessment: Understanding the market risk premium helps investors gauge the level of risk they are taking on compared to the risk-free rate. This can inform decisions on asset allocation and portfolio management.
Financial Modeling: The market risk premium is often used in models such as the Capital Asset Pricing Model (CAPM) to estimate the expected return on an investment. Accurate market risk premium data is crucial for reliable financial modeling.

Analyst Use Case
An analyst might use the Market Risk Premium API to calculate the expected return on a stock investment. By subtracting the risk-free rate from the expected market return, they can determine whether the investment offers a sufficient premium to justify the associated risk.

Endpoint:

https://financialmodelingprep.com/stable/market-risk-premium

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