premia

Premia is the plural form of premium in English, and it is used mainly in scholarly or technical contexts. In finance and economics, premia describe the compensation investors require for bearing risk or for holding certain types of assets. The term most often appears as risk premia, referring to expected excess returns over a risk-free benchmark. Common examples include the equity risk premium (the excess return of stocks over bonds or cash), the term premium (additional return for longer-maturity bonds), credit premia (compensation for credit risk), and liquidity or inflation premia (penalties for holding less liquid assets or for expected inflation).

In asset pricing, premia are evaluated as differences between realized or expected returns and a risk-free reference, and they may be treated as static or time-varying. They underpin theories and models such as the exploration of how risk is priced in financial markets and the decomposition of yields into various premium components.

In actuarial science and some financial literature, premia can refer to premiums charged for insurance policies or other contracts; however, in everyday usage the plural “premiums” is more common, and “premia” is typically reserved for specialized, formal discussions of multiple premium components or historical terminology.

Etymology-wise, premia derives from the Latin plural of premium. In modern English, “premia” is relatively rare outside technical contexts, and careful usage is advised to avoid confusion with the more common plural “premiums.”