Risk premium

Risk premium

The extra return that investors require to hold a risky asset instead of a risk-free one; the difference between the expected returns from a risky investment and the risk-free rate. (See equity risk premium. )

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Part of Speech: noun
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Industry/Domain: Economy
Category: Economics
Company: The Economist
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risk premium

Banking; Investment banking

Premium demanded by investors for investing in risky capital investments. The higher the risk of loss or default, the higher the premium.

risk premium

Economy; Economics

The extra return that investors require to hold a risky asset instead of a risk-free one; the difference between the expected returns from a risky investment and the risk-free ...

risk premium

Economy; International economics

1. The higher expected return (in the sense of mathematical expected value) that an uncertain asset must pay in order for risk averse investors to be willing to hold it. 2. The ...

risk premium

Economy; Economics

The additional interest required by lenders as compensation for the risk that a borrower may default; more generally, the extra return required to compensate an investor.

risk premium

Financial services; General Finance

The reward for holding the risky equity market portfolio rather than the risk-free asset. The spread between Treasury and non-Treasury bonds of comparable maturity.

risk premium

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A method to determine the cost of common equity component of return using the bond yield plus a risk premium based on selected stock market yields to bond yields. Also called BOND ...

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