Calculate the risk premium of your investments. Enter the returns of both your risk free asset and your investment return.

## Risk Premium Formula

The following formula is used to calculate a risk premium.

RP = RF-RA

- Where Ra is the return on a risk free asset
- RF is the return on actual investment

## Risk Premium Definition

A risk premium is the difference in returns between a risk free asset and another asset class or individual asset.

## How to calculate Risk Premium?

How to calculate risk premium?

**First, determine the return of your asset class.**Measure the percentage return of the asset being analyzed.

**Next, determine the return of a risk free asset.**For example a savings account that yields 1% is the

**Finally calculate the risk premium.**Using the formula and returns determined in steps 1 and 2, calculate the risk premium.

## FAQ

**What is risk premium?**

A risk premium is the difference in returns between a risk free asset and another asset class or individual asset.