Term:
Risk premium
Definition:

The extra yield over the risk-free rate owing to various types of risk inherent in a particular investment. For example any issuer other than the U.S. Government must pay a risk premium in the form of a higher interest rate on bonds as the risk of default is less on U.S. government securities than those of other issuers.

Domain:
Finance
Source:
World Bank: Glossary of Finance and Debt
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