Premium bondA bond that is selling for more than its par value.
Single premium life insuranceSingle premium life insurance
A whole life insurance policy requiring one premium payment, which accrues cash value much more quickly than a policy paid in installments.
Call premiumCall premium
Premium in price above the par value of a bond or share of preferred stock that must be paid to holders to redeem the bond or share of preferred stock before its scheduled maturity date.
Risk premium approachRisk premium approach
A common approach for tactical asset allocation to determine the relative valuation of asset classes based on expected returns.
Liquidity premiumLiquidity premium
Forward rate minus expected future short-term interest rate.
Equity risk premiumEquity risk premium
The 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.
Further SuggestionsDefault premium
Waiver of premium
Single Premium Deferred Annuity (SPDA)
life assurance premium relief
Tender offer premium
single premium life insurance
waiver of premium
Unamortized premiums on investments
insurance premium tax
High premium convertible debenture