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Market Risk Premium |
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Market Risk Premium The extra yield on an investment that an investor expects in return for taking on additional risk. The riskier an investment is, the higher the market risk premium must be in order to attract investors. This is why junk bonds have higher yields than investment-grade bonds, for example. It is more commonly called the risk premium. See also: Capital Asset Pricing Model. Market Risk Premium What Does Market Risk Premium Mean? The difference between the expected return on an investment and the risk-free rate of return. Investopedia explains Market Risk Premium It is equal to the slope of the security market line (SML). Related Terms: How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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