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 ?
Premium Bonds aren't "the one safe haven" any more.
Alderman Sir Cuthbert Ackroyd, the then Lord Mayor of London, bought the very first Premium Bond on November 1 1956.
The total amount invested in Premium Bonds has increased from PS19.
The term does refer to what we call the "dollar price" of the bond--a premium bond has a higher price tag than "par" bonds (which have price tags of $100).
Across the UK there are over one million unclaimed Premium Bonds prizes worth over PS48m.
This means the more money invested in Premium Bonds, the higher the overall value of the payouts to customers.
More than 21 million people have Premium Bonds, with 90% holding bonds worth less than PS5,000.
Premium bonds draws are run by National Savings and Investments (NS&I) and prizes are considered 'unclaimed' when the winner does not come forward within 18 months.
Premium Bonds are an investment where, instead of interest payments, investors have the chance to win tax-free prizes.
A CONSUMER website has launched a scathing attack on Premium Bonds, claiming most people would be better off putting their cash into a savings account.