Risk, of course, affects not only investors in insurance companies but also other productive activities to a greater or lesser degree. An aversion to risk, as we have just seen, is in effect built into the value scale of each investor (leaving aside the special case of the compulsive gambler). Consequently, the aversion to risk decreases the demand for future money, affecting both money markets and capital markets. The quantity of money invested at any given interest rate or earnings rate will be diminished, to a degree corresponding to the degree of perceived risk. Equilibrium between supply and demand will therefore be attained at a higher interest rate or a higher earnings rate than if risk were not present.

The amount of this risk premium, of course, depends on the degree of risk as perceived by investors. In the money markets, for example, so-called "junk bonds," associated with a relatively high perceived risk, can be successfully sold only at a much higher interest rate than other bonds. In the capital markets, stocks perceived as exceptionally risky will be priced such that the P/E (price-to-earnings) ratio is much lower, even though it may be unclear whether they have more of an "upside" or "downside" potential. Furthermore, stocks are typically associated with a higher degree of risk than bonds: they may earn far more or far less. Compensating for this added risk, average rates of return are significantly higher in the stock market than in bond markets.