At A Premium

AAA

DEFINITION of 'At A Premium'

The sale of an asset or item at a price significantly above the original purchase price due to high demand, rather than appreciation. At a premium, when used to refer to the cost of an asset, can indicate its increased price and limited supply. Changes in market interest rates, superior performance and limited supply, are examples of factors that can cause an investment to be in high demand and to trade at a premium.

INVESTOPEDIA EXPLAINS 'At A Premium'

For example, sold-out concert or sporting-event tickets may be sold at a premium, at a price above their face value, in the secondary market. A bond that is paying a higher rate of interest than current market rates could also be sold at a premium to its face value, because investors will pay more to earn more interest. In the opposite situation, a bond that pays interest below current market rates would be sold at a discount to its face value.

RELATED TERMS
  1. At A Discount

    This specifically refers to stock that is sold for less than ...
  2. Valuation Premium

    The rate set by a life insurance company based on the value of ...
  3. Premium Income

    1. In investing, income that is earned through the sale of an ...
  4. Premium

    1. The total cost of an option. 2. The difference between the ...
  5. Risk Premium

    The return in excess of the risk-free rate of return that an ...
  6. Option Premium

    1. The income received by an investor who sells or "writes" an ...
Related Articles
  1. Premium Bonds: Problems And Opportunities
    Bonds & Fixed Income

    Premium Bonds: Problems And Opportunities

  2. Why Stocks Outperform Bonds
    Bonds & Fixed Income

    Why Stocks Outperform Bonds

  3. Calculating The Equity Risk Premium
    Options & Futures

    Calculating The Equity Risk Premium

  4. The Equity-Risk Premium: More Risk For ...
    Fundamental Analysis

    The Equity-Risk Premium: More Risk For ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center