What financial concept reflects the compensation for anticipated price changes expected over the investment duration?

The financial concept that reflects the compensation for anticipated price changes expected over the investment duration is the inflation premium. This premium is essentially a component of the nominal interest rate that accounts for the expected rate of inflation over the life of the investment. Investors require this premium to ensure that their returns are not eroded by rising prices, which would decrease the purchasing power of their money over time.

When investors make investment decisions, they look not just at the nominal returns but also at what those returns will be worth in terms of purchasing power. Since inflation can erode the real return on investment, the inflation premium serves as a cushion against the decreasing value of money. This helps ensure that investors receive a return that maintains their real wealth.

In contrast, other concepts such as the yield premium, risk premium, and market premium relate to different aspects of investment returns. The yield premium generally refers to the additional return required by investors for holding a specific asset over others based on its yield. The risk premium is compensation for the risks that investors take beyond the risk-free rate, while the market premium pertains to the excess return expected from investing in the overall market as opposed to risk-free assets. None of these directly focus on compensation for anticipated price changes due to inflation, which is