Stocks and bonds carry investment risk. Buyers demand a premium return or a discounted cost from sellers or issuers in exchange for assuming investment risk. The premium on that risk could theoretically be the same, but equities have historically carried a higher risk premium than bonds.
Measuring Market Risk Premium
The standard equation used to calculate equity risk premium is the return on asset or investment minus the riskfree return for same duration. If the riskfree rate is 2%, an asset offering 5% carries a risk premium of 3%.
According to mainstream finance theory, the riskfree return is any investment that carries no risk; U.S. Treasury bills are typically used as a proxy for the riskfree investment. This risk only includes default risk or absolute loss, not opportunity costs or inflation risk.
For example, Tbills have virtually zero chance of default. This means the investment will not lose any nominal value. However, the rate of inflation might exceed the riskfree rate of return on Tbills, meaning that purchasing power might decline over time.
The risk premium on bonds is more commonly known as the credit spread. The standard formula for a corporate credit spread is the corporate bond yield minus the 10year treasury yield.
Market Risk Premium for Stocks and Bonds
According to research from NYU, the geometric average risk premium on stocks relative to Tbills was 6.11% from 1928 to 2014. In other words, the stocks had to provide an average return of 6.11% above the rate of return on Tbills to entice an investor to give up the riskfree rate.
Similar research from Stanford University found that, from 1866 to 2011, the geometric average credit spread on corporate bonds was only 1.53%.

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Market Risk Premium
Market risk premium is the difference between the expected return ... 
Risk Premium
The return in excess of the riskfree rate of return that an ... 
RiskFree Asset
A riskfree asset is an asset which has a certain future return ... 
Equity Risk Premium
Equity risk premium refers to the excess return that investing ... 
HighYield Bond Spread
A high yield bond spread is the percentage difference in current ... 
OptionAdjusted Spread (OAS)
The optionadjusted spread is a measurement of the spread of ...