This is the reward investors require for taking risk.
A) required return
B) risk-free rate
C) risk premium
D) market risk premium

Question

Quizplus · Accepted Answer

The risk premium is the additional return investors require for taking on risk in an investment. This is the compensation investors receive for the possibility of losing money. The required return is the overall return investors desire from an investment, which includes the risk premium. The risk-free rate is the return an investor would receive from a completely risk-free investment, such as a U.S. Treasury bond. The market risk premium is the additional return investors require for investing in the stock market instead of a risk-free asset, and it represents the difference between the expected return on the market and the risk-free rate. However, only the risk premium directly addresses the additional return needed to compensate for risk.

This Is the Reward Investors Require for Taking Risk