Calculating the risk-free premium | Business

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.PSGWealth's SchalkLouw explains danger pay, better known as the risk premium. He delves into how the expected performance of shares over the next year looks attractive, compared with current money market rates, based on the expected risk premium.

I have discussed the concept of danger pay on a few previous occasions. Basically, this term was mostly associated with soldiers who were required to work in very dangerous areas.

These days it can even include special types of insurance benefits against events like kidnapping for families whose occupations require them to relocate to areas where the risk of abduction is high. Whatever the package entails, in essence it refers to extra benefits or compensation for people who are risking their lives to work in dangerous places, amongst other things.

Many individuals find these benefits extremely attractive, but it’s crucially important that whoever considers them is aware of the associated dangers. In most cases, workers must be willing to pay with their lives in exchange for a few extra thousand rand per month.Get 14 days free to read all our investigative and in-depth journalism. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed.

 

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