Up until 2018, the average risk-free rate in Germany remained relatively stable at approximately 1.4 percent. 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. It is important to remember that the risk-free rate is only theoretical as all investments carry even the smallest of risks. As of 2023, the risk-free rate in Germany was 2.5 percent.
Risk free rates in Europe
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. In Europe, Ukraine and Turkey were among the countries with relatively higher average risk-free rates in 2023 compared to other European countries. The majority of European countries have RF rates under three percent in 2023.
Market risk premiums
Risk free rates reflect market risk premiums (MRP) with Germany displaying low MRP compared to other European countries. 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. During the last ten years, Germany has seen slight increase in market risk premiums.
Average risk free rate (RF) of investment in Germany from 2015 to 2023
The source added the following information "This paper contains the statistics of a survey about the Risk-Free Rate (RF) and the Market Risk Premium (MRP) used in 2023 for 80 countries. We got answers for 102 countries, but we only report the results for 80 countries with more than 6 answers." * No data available for 2016. 2017 data was taken from a previous report.
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Social Science Research Network. (April 17, 2023). Average risk free rate (RF) of investment in Germany from 2015 to 2023 [Graph]. In Statista. Retrieved November 08, 2024, from https://www.statista.com/statistics/885774/average-risk-free-rate-germany/
Social Science Research Network. "Average risk free rate (RF) of investment in Germany from 2015 to 2023." Chart. April 17, 2023. Statista. Accessed November 08, 2024. https://www.statista.com/statistics/885774/average-risk-free-rate-germany/
Social Science Research Network. (2023). Average risk free rate (RF) of investment in Germany from 2015 to 2023. Statista. Statista Inc.. Accessed: November 08, 2024. https://www.statista.com/statistics/885774/average-risk-free-rate-germany/
Social Science Research Network. "Average Risk Free Rate (Rf) of Investment in Germany from 2015 to 2023." Statista, Statista Inc., 17 Apr 2023, https://www.statista.com/statistics/885774/average-risk-free-rate-germany/
Social Science Research Network, Average risk free rate (RF) of investment in Germany from 2015 to 2023 Statista, https://www.statista.com/statistics/885774/average-risk-free-rate-germany/ (last visited November 08, 2024)
Average risk free rate (RF) of investment in Germany from 2015 to 2023 [Graph], Social Science Research Network, April 17, 2023. [Online]. Available: https://www.statista.com/statistics/885774/average-risk-free-rate-germany/