Key Takeaways
Risk premium is basically the extra return you expect when you choose an investment that’s riskier than just keeping your money somewhere safer.
There are different types of risk premiums depending on things like market volatility, the chance a borrower won’t pay back (default risk), or how hard it is to sell an asset (liquidity).
Understanding risk premiums can help investors sort out which investments might be worth it, based on their investing style and risk profile.
Leave a Reply