Risk premia

What is the meaning of risk premia?

Risk premia. Risk premia refers to the amount by which the return of a risky asset is expected to outperform the known return on a risk-free asset.

What are the alternative risk premia?

The emergence of alternative risk premia (such as value, carry, and momentum) as recognized and exploitable sources of returns. Identifying alternative risk premia (the types of alternative risk premia that are regularly and consistently identified as sources of returns for institutional investors).

What is a risk premium?

A risk premium is a measure of excess return that is required by an individual to compensate them for being subjected to an increased level of risk. It is used widely in finance and economics with the general definition being the expected risky return less the risk-free return, as demonstrated by the formula below. is the risk-free return.