risk premium Mill thus separates profit into three parts: first, the interest that must be paid for the capital borrowed, determined in terms of alternative opportunity cost of money. This is equivalent to the riskless rate. The second component is the “value of the risk” associated with the investment. This is equivalent to the equity risk premium. Mill’s third component is a surplus profit, no matter how small. In modern parlance, the “alpha” – a portion of compensation expected to be small in a competitive market.

Mill thus separates profit into three parts: first, the interest that must be paid for the capital borrowed, determined in terms of alternative opportunity cost of money. This is equivalent to the riskless rate. The second component is the "value of the risk" associated with the investment. This is equivalent to the equity risk premium. Mill’s third component is a surplus profit, no matter how small. In modern parlance, the "alpha" – a portion of compensation expected to be small in a competitive market.

http://www.econ.ucsb.edu/conferences/equity05/papers/Goetzmann.pdf