1. If somebody offers you a “golden opportunity” that would allow you to realise an astronomical gain (or in financial jargon, a “return”) without any risk, then you can be sure that the suggested deal is anything but risk-free.Indeed, why should anybody voluntarily pay you an exceptionally high return (which, as we have seen, is nothing else than a risk premium)? If you can buy a new mobile phone for 100, you will not offer to pay 120. So if someone claims to guarantee you a huge return, he does so for two possible reasons:
   • either there are experienced people who know how to correctly evaluate the proposed business, who feel it is very uncertain that it will succeed and that the risk of losing money is important and therefore require a higher risk premium to engage in this matter,
   • or the one who offers you this “golden opportunity” is a crook and his promise of return is nothing but a bait to get your money and run away with it.
2. High uncertainty and high risk therefore imply a high risk premium, and low risk means a low risk premium. So if you want to make a higher profit (achieve a higher return) with your investment, you have to accept more uncertainty and a higher risk. If you do not pay me a risk premium, I am not willing to take a risk, and if you’re not willing to take a risk I’m not willing to pay you a premium.