Categories
Investments glossary

Equity Risk Premium

Equity risk premium refers to the excess return that investing in the stock market provides over a risk-free rate. This excess return compensates investors for taking on the relatively higher risk of equity investing. The size of the premium varies depending on the level of risk in a particular portfolio and also changes over time as market risk fluctuates. As a rule, high-risk investments are compensated with a higher premium.

Click to rate this post!
[Total: 0 Average: 0]

Leave a Reply

Your email address will not be published. Required fields are marked *