Premium bondA bond that is selling for more than its par value.
Default premiumDefault premium
A differential in promised yield that compensates the investor for the risk inherent in purchasing a corporate bond that entails some risk of default.
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.
Waiver of premiumWaiver of premium
A provision in an insurance policy that allows payment of insurance premiums to be permanently or temporarily stopped in the event the policyholder becomes incapacitated.
Premium bondsPremium bonds
See: 'National Savings'.
Forward premiumForward premium
The 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.
Further SuggestionsUnamortized premiums on investments
life assurance premium relief
Tender offer premium
waiver of premium
Risk premium approach
Indemnity Guarantee Premium
insurance premium tax
High premium convertible debenture
Single Premium Deferred Annuity (SPDA)
single premium life insurance