The difference between returns on shares and government bonds is known as
A)the equity risk premium.
B)the risk and return tradeoff.
C)the maturity premium.
D)the risk/reward paradox.

Question

Quizplus · Accepted Answer

The difference between returns on shares and government bonds is known as the equity risk premium. This refers to the additional return that investors expect to receive from investing in equities (such as shares) compared to risk-free investments such as government bonds. The equity risk premium is influenced by factors such as economic growth, inflation, and political stability. Investors demand a higher risk premium to compensate for the greater uncertainty and volatility associated with investing in equities compared to bonds.

The Difference Between Returns on Shares and Government Bonds Is