A risk premium is the return over and above the risk-free rate (generally thought of as the return on U.S. Treasuries) that investors demand to compensate them for the risk of owning an asset. Because ...

Excess returns are returns achieved that are more significant than the return of a proxy. Excess returns will depend on a designated investment return comparison for analysis.

Required rate of return (RRR) gives investors a benchmark to determine the minimum acceptable return on an investment considering the risk involved. By calculating RRR, investors can assess whether an ...

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

Investors demand higher returns from illiquid assets due to greater selling difficulty. Liquidity premium can be calculated by comparing yields of similar liquid and illiquid bonds. Real risk-free ...

Every investment involves a possible gain and a possible loss. The risk/reward ratio compares how much you could lose to how much you could gain. Calculating this ratio may help you decide whether a ...

Security practitioners have to figure out how to accomplish their security goals with the budgets they have. They also must show that their security programs are effective at protecting their ...

ROI is an important measure of an investment's performance but it has some drawbacks. Reviewed by Margaret James Fact checked by Jared Ecker Return on investment (ROI) is a ratio that measures the ...