risk premium

Definition

The reward for holding a risky investment rather than a risk-free one.

Use risk premium in a sentence

The risk premium would hopefully pay off for us, but I did not think it would actually, in the end.

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You should try and make sure that you have accurately calculated the risk premium so that you can know what to expect.

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The risk premium was great and we believed in the company so we decided it was worth the risk as the reward was excellent.

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