Term Premium

Term Premium

The amount by which the yield-to-maturity of a long-term bond exceeds that of a short-term bond. Because one collects coupons on a long-term bond for a longer period of time, its yield-to-maturity will be more. The amount of a term premium depends on the interest rates of the individual bonds.
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As reported in Table II, this scaled measure of the average term premium is 0.
Under a split dollar arrangement, it would be only $1,020 (based on Pacific Mutual Insurance Company's alternative term premium rates).
5% Increase in term premium in the first half of 2013 3% Increase in term life policy count in the first half of 2013 Source: LIMRA Source: ACLI But many still need it: 30 million Gen X and Gen Y households need more life insurance.
The Cleveland model of inflation expectations gives estimates for a number of interest rate components: expected inflation, the real interest rate, the inflation risk premium, and the term premium on real rates (explained below).
Abu Dhabi National Oil Company finalised its 2013 jet fuel term premium at $2.
In industry news, Japan's biggest copper smelter, Pan Pacific Copper, is in talks with buyers in China to slash its term premium for 2013 shipments by 15 percent from this year to $85 a tonne, a source familiar with the matter said.
The term premium is the additional return investors require, over and above the average of expected future short-term interest rates, for accepting a fixed, long-term yield.
The term premium explains why the yield curve usually slopes upward--that is, why the yields on long-term securities usually exceed those on short-term securities.
ADNOC, Asia's third-largest term naphtha supplier after Saudi Aramco and Kuwait Petroleum Corp (KPC), usually takes its cue from KPC, which sealed its April 2009-March 2010 term premium at $19.
Abu Dhabi National Oil Company, Asia's third largest supplier, fixed its next year's term premium at $3-$5 a tonne to Middle East quotes, on an FOB basis in November, while Saudi Arabia set its premiums at $3-$5 a tonne to its own price formula on an FOB basis last week.
The Facility is further evidence of Global's commitment as a long term premium finance lender," stated Richard Kearns, a founding partner at Global.
12) They use professional forecasts of Treasury bill rates to help identify the expected future short-term rate component of the forward rate, which allows relatively precise estimation of the term premium through equation 1.