It also changes over time as market risk fluctuates. The investor thus pays a premium for an investment that will return an amount greater than existing interest rates. A price that exists above some sort of fundamental value is referred to as a premium, and such assets or objects are said to be trading at a premium. Assets may trade at a premium due to increased demand, limited supply, or perceptions of increased value in the future. [‘ˈpriːmiːəm’] payment or reward for acts such as catching criminals or killing predatory animals or enlisting in the military. Bonds trade for a premium when the issuer improves its financial position or when interest rates decrease. Premiums for insurance include the compensation the insurer receives for bearing the risk of a payout should an event occur that triggers coverage.
A well-diversified portfolio may be able to support the additional risk in exchange for a higher yield. This means that, generally, speaking, the more interest rates go down, the more premium bonds there will be in the market. When the bonds were issued in 2001, Target had to offer a 7% coupon yield to sell them. The yield has dipped to below 3% and the bond has traded, at times, for more than a 30% premium. Premiums for options are the cost to buy an option.
What Are Premium Bonds?
If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices. Dividend refers to a prorated share in an amount distributed among stockholders or policyholders from profits or surplus See also syn. Antonym of premium A sum of money in addition to salary that is given to a professional athlete for signing up with a team. Stock exchange business; especially, stockjobbing, manipulation of securities prices. More specifically, in economics and finance for example, there is the “equity premium puzzle” .
We continue to invest in the expansion of live programming, audio programming and the recently launched Yahoo Finance Premium product. For the audience segments identified using their first party data, Forte does not cost extra, in part because Vox Media wants to encourage as many clients as possible to try it out. See how your sentence looks with different synonyms.
Rhymes With Premium
If the company then shores up its balance sheet, the same supply and demand effect will occur. Generally speaking, discount bonds are the opposite of premium bonds. The company issuing the bonds has or is not performing well and the bond price has suffered. That doesn’t mean discount bonds are always a bad investment.
Yukon GMC has marketed Yukon GMC pretty successfully as the rugged, more premium brand relative to Chevy. We do not comment on rumors and speculation, yahoo Finance is integral to Verizon Media’s growth strategy.
Topics For premium
Premia is much less common than premiums, accounting for less than 1% of total usage in US and in UK . Join Macmillan Dictionary on Twitter and Facebook for daily word facts, quizzes and language news. Some shoppers will pay extra for prime cuts of beef, pork, and lamb.
A prize, bonus, or award given as an inducement to purchase products, enter competitions initiated by business interests, etc. A premium bond tends to be less sensitive to changes in interest rates than a discount bond because its duration is lower and its coupon rate tends to be higher.
How Do Premium Bonds Work?
Payment by installment is payment by parts at different times, the amounts and times (often equal namely regular, e.g. mensual) being often definitely stipulated. A bond trading at a premium would also impact its current yield. Yield is an important metric to understand, as it tells you the return you could get from the bond relative to the current price of the bond. A bonus, gift, or sum additional to price, wages, interest, or the like. An amount paid or required, often as an installment payment, for an insurance policy. Adjustable life insurance is a term and whole life hybrid insurance plan that allows policyholders the option to adjust policy features. Level-Premium Insurance is a term life insurance where the premiums remain the same throughout the duration of the contract.
Something trading at a premium might also signal it is over-valued. Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. Something offered at a reduced price as an inducement to buy something else. The word in the example sentence does not match the entry word. The food and service here are superior to any other restaurant in the city. Money offered or given for some special service, such as the return of a lost article or the capture of a criminal. A statement or sometimes action reflecting sexual or relational interest.
A pro rata payment of money by a company to its shareholders, usually made periodically . First they promote a most self-seeker person to a very high position and then through him/her they will promote all their products at a premium price. A prize or bonus given as an inducement, as to purchase products. Premiums are paid for many types of insurance, including health, homeowners, and rental insurance. A common example of an insurance premium comes from auto insurance.
- The purpose of premium pricing is to convey higher quality or desirability than other options.
- Learn how they work and what they mean for individual investors.
- A portion of a debt, or sum of money, which is divided into portions that are made payable at different times.
- Compensation for services that do not have a predetermined value.
- He specializes in writing about investing, real estate and accounting for The Balance.
The company has established itself as a premium online financial brand. DisclaimerAll content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. In context, you are saying that investors don’t inherently trust bonds despite their performance advantage. Some other terms like discrimination could be elected, too. Investors are discriminating against bonds in favor of equities.
Options give the holder the right but not the obligation to buy or sell the underlying financial instrument at a specified strike price. The premium for a bond reflects changes in interest rates https://accountingcoaching.online/ or risk profile since the issuance date. The buyer of an option has the right but not the obligation to buy or sell the underlying instrument at a given strike price for a given period of time.
Learn how they work and what they mean for individual investors. Let’s say there’s a corporate bond with a good risk rating that trades for 105 and has a 5% yield. That yield means it currently pays $52.50 to investors every year ($1,050 x .05). If interest rates go down en masse and every equivalent bond suddenly has a yield of only 3%, owners of the 5% bond will sell it at a premium since its yield is higher. Bonds trade on a secondary market, so the price of the bond floats either below or above the original par value based on supply and demand. When it’s above par value, the bond trades for a premium.
Offered the backpack as a premium for students opening new bank accounts. The amount at which something, such as a security or a currency, is valued above its initial or nominal price. An interest payment, usually on a regular basis, on a loan. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
We could therefore also refer to this puzzle as the “bond __ puzzle”? I can think of only “dispremium” but I don’t think that’s a proper word.
Here are a variety of words whose meaning is nearly the opposite of premium. Of exceptional quality or greater value than others of its kind; superior.