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equity risk premium

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Financial Dictionary

Equity Risk Premium

The extra return that the stock market provides over the risk free rate to compensate for market risk.

Investopedia Commentary

A higher rate of return is required to entice investors into a riskier investment .

Related Links

The Equity Risk Premium - Part 1
Stock Basics Tutorial
Financial Concepts

See also: Equity, Gordon Growth Model, Premium, Risk, T-Bill

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Financial Dictionary

equity risk premium

The extra return expected from investments in common stocks compared to the return from U.S. Treasury securities.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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