Investors want to earn a ____ for their willingness to make investments for which there is no absolute guarantee of future success.
A)capital gain
B)risk premium
C)current income
D)risk profit

Question

Quizplus · Accepted Answer

A risk premium is the additional return investors demand on an investment to compensate for the risk they are taking. It represents the compensation that investors require for investing in an asset that has a higher risk of loss. In other words, investors demand a higher rate of return for investments that have a greater likelihood of losing money. Therefore, option B is the best choice as it represents the compensation investors require for taking on additional risk.

Investors Want to Earn a ____ for Their Willingness to Make