Since investing in the stock market is risky, rm must be higher than rrf to get some people to invest in stocks instead of risk-free bonds. This difference (rm rrf) has a special name: the market risk premium (RPm). It is the extra return we get for being willing to invest in the stock market.\ Since (rm rrf) is in the CAPM equation above, there is another way we could write the equation:\ rs = rrf + (RPm)b\ Sometimes when talking about the CAPM, instead of specifying the market return (rm), we may specify the market risk premium (RPm).\ Exercise 2: Suppose the risk-free interest rate is 6% and the market risk premium is 5%. What is the required return on a stock whose beta is 0.6?