Risk Premium
Risk Management
Definition
The additional return investors require for taking on extra risk compared to risk-free investments, compensating for uncertainty and potential losses in riskier asset classes.
Key Points
- Compensation for taking additional risk
- Varies with market conditions
- Higher during uncertain periods
Examples
Stocks vs Treasury bonds equity premiumCorporate vs government bond credit premiumQuick Info
Category
Risk Management
Related Topics
risk return
equity premium
credit spread
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