- Premium
- (1) Amount paid for a bond above the par value. (2) The price of an option contract; also, in futures trading, the amount the futures price exceeds the price of the spot commodity. 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. The New York Times Financial Glossary
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▪ I. premium pre‧mi‧um 1 [ˈpriːmiəm] noun [countable]1. INSURANCE a payment that you make for insurance:• Some insurance companies offer small sum policies, with monthly or annual premiums.
• single premium life insurance policies
• Car insurance premiums shot up by almost a quarter.
reˈnewal ˌpremiumINSURANCE a sum of money charged for making an insurance policy continue for a further period of time:• Fill in the tear-off slip and send it with your renewal premium to the address below.
2. an additional amount of money, above a standard amount or rate:• The company's earnings will grow by about 25% a year and investors will be willing to pay a premium (= pay more than usual ) for that growth.
• As long as there is a threat of war in the Middle Eastern oil fields, oil prices will command a premium (= buyers will have to pay more than usual ) .
ˈbond ˌpremiumFINANCE the amount by which the price paid for a bond is more than its actual valueconˈversion ˌpremiumFINANCE an increase in value to an investor when one form of investment in a company is exchanged for another:• The debentures are convertible into common stock at $18.14 a share, representing an 18% conversion premium over yesterday's closing price.
moˈbility ˌpremium HUMAN RESOURCESmoney paid to important international businessmen when they have to move from one country to another because of their jobsˈoption ˌpremiumFINANCE the price paid for an option (= the right to buy shares, bonds etc at a particular price in the future):• Commissions on option trades run about 2% to 5% of the option premium.
3. at a premium if something is at a premium, there is little of it available or it is difficult to obtain:• With parking space at a premium in Japanese cities, the microcar is a popular form of transport.
4. at a premium (to something) if one thing is sold at a premium to another, it costs more:• Platinum usually trades at a premium to gold.
5. put/place a premium on something if you put a premium on something, you consider it to be especially valuable:• Employers today put a premium on reasoning skills and willingness to learn.
premium products, goods etc are of higher quality than usual:• Premium brands of beer will grow faster, in line with the trend toward people demanding better quality.
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Premium is generally used to describe when something is trading above its normal price. An asset or fund is described as being at premium when its market price is above its face value. In the capital markets, it is the amount by which a bond sells above par. In foreign exchange terms, it is the margin by which the forward rate is higher than the spot. In commodity markets it is the additional price paid by a consumer when the delivered commodity is of better quality than that specified in the original contract. Premium is the opposite of discount.* * *
Ⅰ.premium UK US /ˈpriːmiəm/ noun [C]► an amount of money that is more than usual: »We're willing to pay a premium for the best location.
attract/command a premium »BMW, Mercedes, Volvo, and even Volkswagen have usually commanded a premium because they are seen as stylish.
► HR, WORKPLACE PREMIUM PAY(Cf. ↑premium pay)► INSURANCE INSURANCE PREMIUM(Cf. ↑insurance premium)Ⅱ.premium UK US /ˈpriːmiəm/ adjective► of very high quality: »The premium package also provides higher screen resolution.
»All high street banks offer some sort of ""premium banking service"" to wealthier customers.
► very high, or higher than usual: »Experts advise businesses to switch to producing quality goods, which will be desirable to customers even at a premium price.
Financial and business terms. 2012.
