Learn the step-by-step process to calculate the equity risk premium. Understand stock and bond return expectations and make ...

A risk premium is the return over and above the risk-free rate (generally thought of as the return on U.S. Treasuries) that investors demand to compensate them for the risk of owning an asset. Because ...

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of ...

Bonds' interest rates combine risk-free rate, inflation, liquidity, maturity, and default risk premiums. High-risk companies offer higher interest rates to compensate for possible default risks.

In the first article in this series, Premium was defined basically as time value and the expected movement in a specific option. It can also be referred to as extrinsic value, as it is the value ...