Noun
risk premium (plural risk premiums)
(finance, investing) The return in excess of the risk-free rate of return that an investment is expected to yield. Increase in the interest rate of a security based on financial risk.
Spain is finding it very difficult to finance itself with sovereign debt risk premium so high. Mariano Rajoy
3. Equity market risk premium: The return on investment that investors require above the risk free rate. Source: Internet
A dramatic increase in the velocity of money as the cause of hyperinflation is central to the "crisis of confidence" model of hyperinflation, where the risk premium that sellers demand for the paper currency over the nominal value grows rapidly. Source: Internet
As a result, future cash flows are discounted by both the risk-free rate as well as the risk premium and this effect is compounded by each subsequent cash flow. Source: Internet
Banks and other lenders adjust for this inflation risk either by including an inflation risk premium to fixed interest rate loans, or lending at an adjustable rate. Source: Internet
Negative lease rates for silver may indicate bullion banks require a risk premium for selling silver futures into the market. Source: Internet