Premium

Business / Finance / Premium: (1) A bond sold above its par value. (2) The price of an option contract; also, in futures trading, the amount by which the futures price exceeds the price of the spot commodity. For convertibles, amount by which the price of a convertible exceeds parity, and is usually expressed as a percentage. If a stock is trading at $45, and the bond convertible at $50 is trading at 105, the premium is $15, or 16.66% (15/90). If the premium is high, the bond trades like any fixed income bond; if low, like a stock. See: Gross parity, net parity. For futures, excess of fair value of future over the spot index, which in theory will equal the Treasury bill yield for the period to expiration minus the expected dividend yield until the future's expiration. For options, price of an option in the open market (sometimes refers to the portion of the price that exceeds parity). For straight equity, price higher than that of the last sale or inside market. Related: Inverted market premium payback period. Also called break-even time; the time it takes to recover the premium per share of a convertible security.

Other Words for Premium

Premium Verb Synonyms: incentive, inducement, stimulus, incitement, lure, bait, spur, goad, reward, come-on, freebie
Premium Noun Synonyms: bonus, extra, dividend, prize, award, reward, perquisite
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Insurance Premium

Business / Finance / Insurance Premium: A contract detailing an insurance policy and outlining what risks are insured, what insurance premiums are to be paid by the policyholder, what deductibles prevail, and all the details associated with MORE

Premium Wines

Life Style / Wine / Premium Wines: A subjective term to describe a higher quality classification of wine above every day drinking table wines. While premium wines maybe very expensive there is no set price point that distinguishes when MORE

Risk Premium

Business / Finance / Risk Premium: The 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. MORE

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