Premium


 

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Premium

In the context of insurance, a premium is the regular sum you pay to keep your cover in force.

Premium

The extra amount you pay for a security over and above its intrinsic value. For example: Warrants: the premium on a warrant is calculated as the price of the warrant minus the difference between the exercise price and the price of the underlying asset. So if a warrant costing 8p gives you the right to buy a share at 75p, and that share was currently trading at 70p, the premium would be 3p (8-5). Investment trusts: the premium is the amount by which the share price of the investment trust exceeds its net asset value per share. e.g. If the Net Asset Value is £3.00, and the share price of the trust is £3.30, the trust is trading at a 10% premium to its NAV. In the more common situation where the share price is below the net asset value, the trust is said to be trading at a discount.



Similar Matches

Single Premium Deferred Annuity (SPDA)

Single Premium Deferred Annuity (SPDA)

An IRA-like annuity into which an investor makes a lump-sum payment that is invested in either a fixed-return instrument or a variable-return portfolio, which is taxed only when distributions are taken.


Premium bonds

Premium bonds

See: 'National Savings'.


Liquidity premium

Liquidity premium

Forward rate minus expected future short-term interest rate.


Forward premium

Forward 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.


High premium convertible debenture

High premium convertible debenture

A bond with a long-term, high-premium, common stock conversion feature. It also offers a competitive interest rate. This type of investment vehicle is aimed at bond investors who want to be able to convert into stock to hedge against inflation.


Further Suggestions

Default premium
insurance premium tax
Premium income
Percentage premium
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single premium life insurance
life assurance premium relief
Unamortized premiums on investments
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Term premiums
waiver of premium
Bond premium
Indemnity Guarantee Premium
Waiver of premium
Forward premium
Insurance premium
option premium
Risk premium
Conversion premium
Fixed premium
equity risk premium
insurance premium
Option premium
Call premium


 
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