The extra yield over the risk-free rate owing to various types of risk inherent in a particular investment. For example, any borrower other than the U.S. government usually must pay investors a risk premium in the form of a higher interest rate on loans to account for the fact that the risk of default is less on U.S. government securities than on credit instruments of other borrowers. Businesses expect to earn a substantial risk premium when they invest in developing or unstable companies.