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Bond premium |
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Bond premiumSee: Bond discountBond premium Similar MatchesEquity risk premiumEquity risk premiumThe concept that justifies investment in stocks, where your capital is at risk, rather than gilt-edged bonds which are as safe an investment as you can get and where your capital is not at risk provided you hold the bond til maturity.The theory goes that it is only worth investing in stocks if the return you get exceeds the return you could get on gilts - otherwise, why would you take on the extra risk? The difference in returns is known as the equity risk premium.Every historical analysis of returns achieved by stocks compared to bonds shows that stocks outperform bonds in the long term. This is why you repeatedly hear pundits say that the stock market, while risky in the short term, is not risky in the long term. The key thing, as a private investor, is to leave your money in the market for long enough for the long term benefit to eradicate the short term risk. Stick your money in the market for two months, and it might go down 20% if you are unlucky. Stick it in a well-diversified portfolio for 30 years, and it should produce returns that comfortably exceed what you could have got from bonds. Insurance premiumInsurance premiumThe amount payable by the insured in return for indemnification against specified risks. Premium bondsPremium bondsSee: 'National Savings'. Forward premiumForward premiumThe difference between a forward exchange rate and the spot exchange rate, expressed as an annualized percentage return on buying foreign currency spot and selling it forward. Risk premiumRisk premiumThe reward for holding the risky equity market portfolio rather than the risk-free asset. The spread between Treasury and non-Treasury bonds of comparable maturity. Further Suggestionswarrant premiumoption premium Call premium Premium Single Premium Deferred Annuity (SPDA) Term premiums insurance premium tax Percentage premium Option premium Conversion premium Waiver of premium premium life assurance premium relief Risk premium Default premium Insurance premium Forward premium Single premium life insurance Indemnity Guarantee Premium Premium bond waiver of premium Unamortized premiums on investments Tender offer premium Premium income single premium life insurance |
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