Risk Premium Solution

STEP 0: Pre-Calculation Summary
Formula Used
Risk Premium = Return on Investment (ROI)-Risk Free Return
RP = ROI-Rfreturn
This formula uses 3 Variables
Variables Used
Risk Premium - Risk Premium is the return in excess of the risk-free rate of return investment is expected to yield.
Return on Investment (ROI) - Return on investment (ROI) is the ratio of a profit or loss made in a fiscal year expressed in terms of an investment.
Risk Free Return - Risk Free Return is the theoretical rate of return attributed to an investment with zero risk.
STEP 1: Convert Input(s) to Base Unit
Return on Investment (ROI): 50000 --> No Conversion Required
Risk Free Return: 12 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
RP = ROI-Rfreturn --> 50000-12
Evaluating ... ...
RP = 49988
STEP 3: Convert Result to Output's Unit
49988 --> No Conversion Required
FINAL ANSWER
49988 <-- Risk Premium
(Calculation completed in 00.004 seconds)

Credits

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Created by Team Softusvista
Softusvista Office (Pune), India
Team Softusvista has created this Calculator and 600+ more calculators!
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Verified by Himanshi Sharma
Bhilai Institute of Technology (BIT), Raipur
Himanshi Sharma has verified this Calculator and 800+ more calculators!

Important Formulas of Investment Calculators

Compound Interest
​ Go Future Value of Investment = Principal Investment Amount*(1+(Annual Interest Rate/Number of Periods))^(Number of Periods*Number of Years Money is Invested)
Certificate of Deposit
​ Go Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years)
Capital Gains Yield
​ Go Capital Gains Yield = (Current Stock Price-Initial Stock Price)/Initial Stock Price
Risk Premium
​ Go Risk Premium = Return on Investment (ROI)-Risk Free Return

Risk Premium Formula

Risk Premium = Return on Investment (ROI)-Risk Free Return
RP = ROI-Rfreturn

How to Calculate Risk Premium?

Risk Premium calculator uses Risk Premium = Return on Investment (ROI)-Risk Free Return to calculate the Risk Premium, Risk Premium is the return in excess of the risk-free rate of return investment is expected to yield. Risk Premium is denoted by RP symbol.

How to calculate Risk Premium using this online calculator? To use this online calculator for Risk Premium, enter Return on Investment (ROI) (ROI) & Risk Free Return (Rfreturn) and hit the calculate button. Here is how the Risk Premium calculation can be explained with given input values -> 49988 = 50000-12.

FAQ

What is Risk Premium?
Risk Premium is the return in excess of the risk-free rate of return investment is expected to yield and is represented as RP = ROI-Rfreturn or Risk Premium = Return on Investment (ROI)-Risk Free Return. Return on investment (ROI) is the ratio of a profit or loss made in a fiscal year expressed in terms of an investment & Risk Free Return is the theoretical rate of return attributed to an investment with zero risk.
How to calculate Risk Premium?
Risk Premium is the return in excess of the risk-free rate of return investment is expected to yield is calculated using Risk Premium = Return on Investment (ROI)-Risk Free Return. To calculate Risk Premium, you need Return on Investment (ROI) (ROI) & Risk Free Return (Rfreturn). With our tool, you need to enter the respective value for Return on Investment (ROI) & Risk Free Return and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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