Why is the "equity risk premium" an important concept to understand in finance?

Select an answer:

It is the "premium" or extra return offered to accept risk by investing in stocks.

It is the risk$-$free rate minus the average market return on investments.

It is the "premium" that caps the return on investing in stocks to the risk$-$free rate.

It is the measure of how high stocks are priced over the going market rate.