Definition

Premium

Premium is the difference between the selling price and the fact value of a bond/stock, when the bond/stock is sold for more than its face value.

Definition 2.

Premium as related forward rates, represents the percentage amount by which the forward rate exceeds the spot rate. As related to currency options, represents the price of a currency option.


Premium is the amount paid for an option contract.


Premium means something of value given free or at a nominal charge as an incentive to buy a product. Also, the amount by; which a bond’s market price exceeds its par value. Also, a fee paid on an insurance policy.


In insurance, a fee paid to the insurance company for protection against loss; in consumer sales promotion, a gift given to a customer for buying a certain product.

Webster Dictionary Meaning

1. Premium
- A reward or recompense; a prize to be won by being before another, or others, in a competition; reward or prize to be adjudged; a bounty; as, a premium for good behavior or scholarship, for discoveries, etc.
- Something offered or given for the loan of money; bonus; -- sometimes synonymous with interest, but generally signifying a sum in addition to the capital.
- A sum of money paid to underwriters for insurance, or for undertaking to indemnify for losses of any kind.
- A sum in advance of, or in addition to, the nominal or par value of anything; as, gold was at a premium; he sold his stock at a premium.
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