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Risk premium

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.

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Risk premium application in finance

Asset pricingPortfolio allocationRisk managementDividend yieldCapital gains
9 related topics

In agriculture

Crop pathogenUnited StatesFusarium head blightMultiply-resistantPatent
5 related topics

Risk premium application in managerial economics

Risk aversionJob security
2 related topics

Formal definition in expected utility theory

Expected utility theoryUtility function
2 related topics

Topics to explore

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Overview

Formal definition in expected utility theory

Risk premium application in finance

Risk premium application in managerial economics

In public goods

In agriculture

Example of observed risk premium

Advanced semantic analysis

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Map overview Semantic statistics

Risk premium

Nodes39
Edges38
Triples78
Avg. degree1.95
Density0.051282
Components1

How this topic connects Entity context

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Risk premium

Top relations

related to External links · 19
Risk premium → Benchmark ModelRuben, Cohen, Composite Price Index, Dividend Yield, Duration, Equity Risk Premium, Estimating, Fundamental Risk, June, Long-Term Return, November, Quality, Ruben, Stocks, Systematic Risk Archived, The Long-run Behaviour, The Relationship Between, Wayback MachineHussman Funds, Wilmott Magazine
related to Using the risk premium to produce valuations · 11
Risk premium → Beta, Capital Asset Pricing Model, CAPM, If, In, In Finance, One, The, There, Therefore CAPM, This
related to Of crop pathogens · 7
Risk premium → Farmers, For, Fusarium, MR, The, Then, United States
related to Equity instruments · 5
Risk premium → For, In, Individual, The, This
related to Risk premium application in banking · 5
Risk premium → For, Risk, Stakeholders, The, This
related to Risk premium application in managerial economics · 4
Risk premium → Another, In, Regarding, The
related to Empirical estimates of risk premium from securities markets · 3
Risk premium → European Union, Schroeder, United Kingdom
related to Example of observed risk premium · 3
Risk premium → Further, Suppose, The
is a · 2
Risk premium → expected return of a company stock, measure of excess return that is required by an individual to compensate being subjected to an increased level of risk
related to Risk premium application in finance · 2
Risk premium → The, Two

Important terminology Word statistics

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Important terminology

risk premium return expected market equity rate displaystyle value stock less price risk-free finance application increased risky utility example beta

Entity relationships Subject–Predicate–Object triples

SubjectPredicateObjectConfidenceSrc
Risk premiumis ameasure of excess return that is required by an individual to compensate being subjected to an increased level of risk0.90text
Risk premiumis aexpected return of a company stock0.90text
financial riskinstance ofa general observation regardless of application is that the risk premium is larger during economic downturns and during periods of increased uncertainty.There are many forms of…0.80text
physical riskinstance ofa general observation regardless of application is that the risk premium is larger during economic downturns and during periods of increased uncertainty.There are many forms of…0.80text
and reputation riskinstance ofa general observation regardless of application is that the risk premium is larger during economic downturns and during periods of increased uncertainty.There are many forms of…0.80text
industry volatilityinstance ofInvestors also analyse many other factors about a company that may influence its risk0.80text
cash flowsinstance ofInvestors also analyse many other factors about a company that may influence its risk0.80text
debtinstance ofInvestors also analyse many other factors about a company that may influence its risk0.80text
and other market threatsinstance ofInvestors also analyse many other factors about a company that may influence its risk0.80text
asset pricinginstance ofRisk premium application in financeThe risk premium is used extensively in finance in areas0.80text
portfolio allocationinstance ofRisk premium application in financeThe risk premium is used extensively in finance in areas0.80text
risk managementinstance ofRisk premium application in financeThe risk premium is used extensively in finance in areas0.80text

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