Premium Bond
A bond that is priced higher than its par value. Investopedia Says:
If a bond's price is higher than its par value it is selling at a premium; this occurs because the interest rate on the bond is higher than the prevailing rates in the market, making the premium bond worth more than a bond paying a lower rate. For example, if a bond with a 5% coupon were selling at par ($1000 let's say), it would be worth less than the bond paying 7%. Therefore the bond paying 7% would have to be priced higher than par, thus equalizing the attractiveness of the two bonds. Related Terms:
Bond
Discount Bond
Face Value
Interest Rate
Original Issue Discount - OID
Par Value
Yield To Maturity - YTM |