The additional return offered by a more risky investment relative to a safer one is called

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The additional return offered by a riskier investment relative to a safer one is called a risk premium. It compensates the investor for taking on additional risk with their investment. Option A (the risk-free rate) refers to the rate of return on a completely risk-free investment, such as US Treasury bonds. Option B (risky return) is not a commonly used term in finance. Option D (insurance premium) is the price paid for insurance coverage and is not related to investment returns.

The Additional Return Offered by a More Risky Investment Relative