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PremiumIn the context of insurance, a premium is the regular sum you pay to keep your cover in force.PremiumThe 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 MatchesSingle 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 bondsPremium bondsSee: 'National Savings'. Liquidity premiumLiquidity premiumForward rate minus expected future short-term interest rate. 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. High premium convertible debentureHigh premium convertible debentureA 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 SuggestionsDefault premiuminsurance premium tax Premium income Percentage premium Tender offer premium Single premium life insurance single premium life insurance life assurance premium relief Unamortized premiums on investments Premium bond 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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