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Equilibrium Risk Premium
The expected return on a risky asset over the risk-free rate that brings the supply and demand for the asset into balance.
Risk-free Rate
The interest rate at which an investor can invest in an absolutely risk-free security over a specified period.
Arbitrage Opportunity
A situation where a trader can profit from differences in price of the same or similar financial instruments on different markets or in different forms.
Risk-free Rate
The theoretical rate of return of an investment with no risk of financial loss, often represented by government bonds.
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