Risk premium

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Notion

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Science and technology

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What Wikipedia says

A risk premium is a measure of excess return that is required by an individual to compensate being subjected to an increased level of risk. It is used widely in finance and economics, the general definition being the expected risky return less the risk-free return, as demonstrated by the formula below.

Excerpt from the Wikipedia article “Risk premium”, under the CC BY-SA 4.0 license. Read the article on Wikipedia

Image: Weyo2008, CC BY-SA 4.0, via Wikimedia Commons.