The risk premium is the:
A)extra rise in interest rates when the Federal Reserve identifies an output gap.
B)extra interest charged by lenders to account for risk.
C)risk-free rate of interest.
D)federal funds rate.

Question

Quizplus · Accepted Answer

The risk premium refers to the extra interest charged by lenders to account for the risk involved in lending to a particular borrower or investing in a particular asset. It is the additional return that investors demand in order to compensate for the risk of loss due to default or other factors.

The Risk Premium Is The