Among the factors influencing the risk premiums on corporate securities are: volatile earnings, length of time in operation and amount of leverage employed.

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These factors directly impact the perceived risk associated with a corporate security. Volatile earnings can lead to unpredictability in returns, a shorter operational history may suggest less stability or proven track record, and high leverage indicates a greater reliance on debt, which can increase financial risk. All these factors can lead to higher risk premiums as investors demand greater compensation for the increased risk.

Among the Factors Influencing the Risk Premiums on Corporate Securities