22:06 Jun 30, 2010
Risk premia (illiterati in the financial world increasingly and aggressively call them "risk premiums", tut-tut...) are indeed a sort of insurance price on risk which attends, typically, a country's government bonds. So if Bulgaria is deemed (assessed by Standard and Poors, say) "blue chip", then buyers of Bulgarian government paper pay less for the attendant risk, and _vice-versa_. In everyday speech, we have "danger money", typically paid by employers (say, mineowners) who ask employees (say, miners) to perform danger-ridden jobs. Same thing, different terms, basically. |