Premium which is considered as difference of expected return on common stock and current yield on Treasury bonds is called?

Question

Premium which is considered as difference of expected return on common stock and current yield on Treasury bonds is called?

current risk premium
past risk premium
beta premium
expected premium

LohaHridoy

6 views

2025-01-04 04:42

1 Answers

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AhmedNazir · Accepted Answer · 2022-09-01T13:21:41+06:00

Answer: Option 1

Premium which is considered as difference of expected return on common stock and current yield on Treasury bonds is called current risk premium. A risk premium is the return in excess of the risk-free rate of return an investment is expected to yield; an asset's risk premium is a form of compensation for investors who tolerate the extra risk, compared to that of a risk-free asset, in a given investment.