premium bond

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Premium bond

A bond that is selling for more than its par value.

Premium Bond

A bond with a price higher than its face value. A premium bond occurs when a particular bond's coupon rates exceed the interest rates prevailing at the time. For example, if a bond was issued with a 5% coupon and most other bonds are paying 2%, this bond has more value on both the primary and secondary markets. As a result, it is more expensive and is sold at a premium.

premium bond

A bond that sells at a price above its par value. An investor must be careful about purchasing a bond that is selling at a premium because of the possibility of a call by the bond's issuer for sinking fund requirements or for refunding. Except for convertible bonds, the size of a bond's premium usually can be expected to decline as the bond approaches maturity, at which time it will be paid off at par.

premium bond

a FINANCIAL SECURITY issued by the UK government as a means of raising money for the government and encouraging private SAVING. Premium bonds are issued in small denominations, but do not pay interest, nor can a capital gain be obtained on redemption, since they are issued and redeemed at their face value. Their appeal lies in the prospect of a ‘gambler's chance' of winning a substantial lump sum of money in a monthly prize lottery (numbers being drawn electronically by ‘ERNIE’).

premium bond

a FINANCIAL SECURITY issued by the UK government as a means of raising money for the government and encouraging private SAVING. Premium bonds are issued in small denominations but do not pay interest, nor can a capital gain be obtained on redemption since they are issued and redeemed at their face value. Their appeal lies in the prospect of a ‘gambler's chance’ of winning a substantial lump sum of money in a monthly prize lottery (numbers being drawn electronically by ‘ERNIE’).
References in periodicals archive ?
Also on This Day: 1512: Michelangelo's SistineChapel in Rome was opened; 1695: the Bank of Scotland was founded; 1848: WH Smith opened its first railway bookstall at Euston Station, London; 1956: the first Premium Savings Bonds went on sale; 1959: the first section of the M1 was built; 1993: the European Union was established.
1) Figures exclude monthly interest payments for Income Bonds, Pensioners Guaranteed Income Bonds and Premium Savings Bonds Prizes.
Ernest Marples, the Postmaster-General, pressing a button to start up his namesake, Ernie, for the first Premium Savings Bonds draw' Chancellor Gordon Brown has allowe dagenerous birthday bonanza for Premium Bond investors