The difference by which the required discount rate exceeds the risk-free rate is called the ________.

Question

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The difference by which the required discount rate exceeds the risk-free rate is called the risk premium. This represents the compensation investors demand for taking on additional risk. Option A (excess return) refers to the additional return earned above a certain benchmark, while Option C (inflation premium) and Option D (maturity premium) are specific factors that can affect the required discount rate but not necessarily the risk premium.

The Difference by Which the Required Discount Rate Exceeds the Risk-Free