Risk Premium

One way to measure how much risk you're taking with any particular investment is by looking at its risk premium. Some analysts define this statistic as the difference between the return on the risk-free 13-week Treasury bill and the potential return you would receive on the investment in question. The excess return is compensation for the investment's greater volatility. Risk premium, as it applies to stocks, can also be measured using beta and alpha. For bonds, the higher the yields that are paid, typically the more speculative the bond is.