← GlossaryInvesting

Risk Premium

A risk premium is the additional return, or price, that compensates for uncertainty. Shares must offer more than safe deposits to attract investors; during a war, oil prices include a premium for the risk of supply disruption.

Why It Matters

When fear rises, risk premiums rise, and prices of risky assets fall.

In India

Oil fell about 13% in a day when a US–Iran ceasefire was agreed in April 2026, as part of its war risk premium disappeared.

See it in the news
What moved the money: July 2026Aug 3, 2026The ceasefire is “over”: how one sentence moved oil 7%Jul 9, 2026A peace deal, oil at $72, and what “reopening” a strait actually meansJun 29, 2026A two-week ceasefire, and oil falls 13% in a dayApr 9, 2026
Related Terms
VolatilitySafe HavenBond Yield
← Reverse FlippingAll termsRule of 72 →