The risk premium is a financial concept that refers to the additional return investors require when they invest in assets or securities with higher levels of risk. In other words, it's the extra amount of money an investor demands for taking on more risk than would normally be expected.
This term can also refer to the difference between a government bond yield and a corporate bond yield of similar maturity but different credit quality. This is known as the credit spread or default risk premium, which reflects the additional return required by investors to compensate for the higher risk of default associated with corporate bonds compared to government bonds.
In summary, the term "risk premium" refers to the extra amount of money that investors demand when they take on more risk in order to achieve a higher potential return.