Risk premium
Risk premium (also known by its acronym, RP) is the difference between the expected rate of return on a given risky asset and that on a less risky asset.
Definitions
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Risk premium (RP). The difference between the expected rate of return on a given risky asset and that on a less risky asset.
According to Principles of Economics by Timothy Taylor (3rd edition),
- Risk premium. A payment to make up for the risk of not being repaid in full.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
