The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the:
A) geometric average return.
B) inflation premium.
C) risk premium.
D) time premium.
E) arithmetic average return.

Question

Quizplus · Accepted Answer

The excess return earned by investing in a risky asset compared to a risk-free asset is called the risk premium. This premium compensates investors for taking on the additional risk of a volatile investment, and is the difference between the expected return of the risky asset and the risk-free rate.

The Excess Return You Earn by Moving from a Relatively