Risk premium.

Risk premium is the additional premium which is given to the investors to take risk than non-risky return .

According to Besley and Brigham,” The portion of the expected return that can be attributed to the additional risk of an investment; it is the difference between the expected rate of return on a given risky asset and that on a less risky asset.”

According to Ross, Westerfield and Jordan,” The excess return required from an investment in a riskly assets over that required from a risk free investment.”

Share it:  Cite

More from this Section

  • Average down
    Average down is a strategy used by investors to reduce the average cost of shares, in ...
  • Collecting Bank
    Collecting Bank is any bank, other than the remitting bank, involved in processing the ...
  • Savings banks
    Depositor-owned, bank like institutions chartered by individual states and almost identical ...
  • Nonactivist
    Nonactivist is an economist who believes that the performance of the economy would be ...
  • Forward Contract
    The forward market facilitates the trading of forward contracts on currencies. A forward ...