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Percentage Premium

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Percentage premium
Applies mainly to convertible securities. Premium over parity of a convertible bond divided by parity.

Percentage Premium
The amount the price of a convertible bond exceeds its parity, expressed as a percentage. Convertible bonds may be traded like most bonds, and fluctuate in price like all securities. When its market value equals the value of the underlying common stock, the bond is said to have parity. When a convertible bond trades at a premium, this means that it is more expensive than the current value of the underlying. A convertible bond may trade at a premium if the issuer has a good credit rating and/or if investors believe that the price of the common stock will rise again.


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With respect to water views, the percentage premium is expected to be greatest in Christchurch and lowest in Wellington, reflecting differences in supply.
For example, if a typical percentage premium for a tender offer is 20%, the premium would be $20 on a $100 share of stock, but only $4 on a $20 share of stock.
Percentage premiums automatically reflect increases in hourly pay rates, but cents-per-hour premiums (the principal type used) require adjustment to keep pace.
 
 
 
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