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 DEAL WITH POST OFFICE WILL END POST Offices will stop selling premium bonds after a contract with NS&I comes to an end.
I half thought that after over 50 years of owning a premium bond, I'd finally won
PREMIUM Bonds are the UK's favourite savings vehicle with over PS50billion in them.
Across Tyne and Wear, a total of 9,253 premium bond prizes are awaiting claim, worth a combined PS450,200.
4 million in premium bonds prizes have gone unclaimed in the West Midlands it has been revealed.
In the case of NS&I, Premium Bond prizes are being cut back as the organisation meets its new Net Financing target which is set by HM Treasury.
You can check if you are a winner by entering your Premium Bond holder's number into the prize checker at www.
In Teesside, there are almost 170,000 Premium Bond holdings worth more than pounds 220m and there are over 3,000 prizes worth over pounds 190,000 that still remain unclaimed.
You simply go into the next monthly Premium Bond draw.
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.
It defended the change, saying that maintaining the chances to win a tax free prize on a regular basis was important to Premium Bond holders.
WHEN two Premium Bond prizes hit my doormat this week - only pounds 50 apiece, of course, but the sight of one of those envelopes always lift the spirits - I decided a bit more of our shrinking family savings pot should go on this harmless flutter.