Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. general management
  3. calculation of the risk premium.

Calculation of the risk premium.

70.2K

Verified Solution

Question

General Management

Calculation of the risk premium.

Answer & Explanation Solved by verified expert
4.3 Ratings (694 Votes)
Risk Premium A risk premium is a return on investment above the riskfree rate that an investor needs to be compensated for investing in higherrisk investments Put simply the more risk an investment has the higher the return an investor needs to make it worthwhile Its also known as the risk premium equation of the default risk premium and is commonly used by investors and finance students who deal with the financial markets Risk premium is used to calculate how much a potential investor needs to be compensated for taking on extra risk when compared to a lower riskfree investment Typically the US treasury bill Tbill is used as the riskfree rate in the US but in finance theory the riskfree rate is any investment which has no risk Risk Premium Formula Risk Premium rarf ra Return on    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

When and how did you become aware of people being treated differently because of race, culture,...

Psychology
Q

Problem 7 4 When n number of particles of masses m 2m 3m nm are...

Physics
Q

Find the radius of the circle in the figure to the right EXXE The radius...

Basic Math
Q

gonometry Spring 2023 Sp23 MATH 1106 90 Tri 5 1 Points DETAILS Sketch the curve...

Basic Math
Q

7 Given the sequence an n 5 If the sequence converges indicate the 6 n...

Calculus
Q

If you invest $200 at 12% APR for three years, how...

Accounting
Q

The standard cost card for Sail Company's only product shows the...

Accounting
Q

Note: This problem is for the 2022 tax year. Alfred E. Old and...

Accounting
Q

ohnson Electrical produces industrial ventilation fans. The company plans to manufacture 69,000 fans evenly over...

Accounting
Q

Master Budget Case: ToyWorks Ltd. ToyWorks Ltd. is a company that manufactures and sells a...

Accounting
Q

GAAP requires that Research and Development (R\&D) costs be treated as period expenses, prohibiting their...

Accounting
Q

ANATOMY OF A FRAUD - case studies Identify the missing control system from the following...

Accounting