Examveda

An additional desired compensation by investors for assuming an additional risk on investment is classified as

A. risk premium

B. investor premium

C. additional premium

D. assumed premium

Answer: Option A

Solution (By Examveda Team)

An additional desired compensation by investors for assuming an additional risk on investment is classified as risk premium. A risk premium is the return in excess of the risk-free rate of return an investment is expected to yield; an asset's risk premium is a form of compensation for investors who tolerate the extra risk, compared to that of a risk-free asset, in a given investment.

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