Difference between revisions of "Risk premium"
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According to [[Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition)]], | 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. | :[[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. | ||
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==Related concepts== | ==Related concepts== | ||
Latest revision as of 20:00, 2 June 2020
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.
