Economics · Financial Economics
What is meant by 'risk premium' in economics?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The return expected to yield equal to the risk-free return of government securities
- 2The excess return expected to be yielded over the risk-free rate of return to compensate for risk✓
- 3The absolute risk factor on an investment asset is high
- 4The return on investment is guaranteed to be exceptionally high
Correct answer
The excess return expected to be yielded over the risk-free rate of return to compensate for risk
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