What does 'At A Premium' mean

At a premium is 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.

BREAKING DOWN '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. Premium To Net Asset Value

    A pricing situation that occurs when the stock value of a closed-end ...
  2. Premium Bond

    1) A bond that is trading above its par value. A bond will trade ...
  3. Amortizable Bond Premium

    A tax term referring to the excess premium paid over and above ...
  4. Basic Premium Factor

    The acquisition expenses, underwriting expenses and profit, as ...
  5. Advance Premium Fund

    Insurance companies who receive advance premiums must account ...
  6. Earned Premium

    The amount of total premiums collected by an insurance company ...
Related Articles
  1. Insurance

    Explaining Premiums

    Premium has a few different meanings in the financial world.
  2. Investing

    What is a Premium Bond?

    A premium bond is one that trades above its face or nominal amount.
  3. Investing

    Are Bonds Selling At A Premium A Good Investment?

    A bond with a par value – or face value -- of $1,000 is selling at a premium when its price exceeds par.
  4. Financial Advisor

    Understanding Life Insurance Premiums

    When buying permanent life insurance, what amount of premium should you pay for the coverage?
  5. Managing Wealth

    How Interest Rates Affect Property Values

    Along with their impact on mortgages, interest rates affect capital flows, the supply and demand for capital, and an investor’s required rate of return.
  6. Investing

    Understanding Market Risk Premium

    Market risk premium is equal to the expected return on an investment minus the risk-free rate. The risk-free rate is the minimum rate investors could expect to receive on an investment if it ...
  7. Investing

    Premium Bonds: Problems And Opportunities

    Learn all about premium bonds and how you can make them work for you.
  8. Investing

    Tactical Tips For Bond Investors

    Profit from long-term market trends by buying bonds when other investors shy away.
  9. Investing

    Know Your Cost Basis For Bonds

    Nobody likes taxes, but tax reporting is an inevitable and unavoidable part of investing. If you buy stock, determining your costs basis is a slightly frustrating but fairly straightforward exercise. ...
  10. Investing

    What is a Share Premium Account?

    The share premium account is an equity account found on a company’s balance sheet.
RELATED FAQS
  1. Is market risk premium the same for all investors and investments?

    Learn about how market risk premiums are determined, how they are calculated, why some assets require higher premiums and ... Read Answer >>
  2. What does it mean when a bond is selling at a premium? Is it a good investment?

    When the terms premium and discount are used in reference to bonds, they are telling investors that the purchase price of ... Read Answer >>
  3. What is the historical market risk premium?

    Learn what the historical market risk premium is and the different figures that result from an analyst's choice of calculations ... Read Answer >>
  4. Is the market risk premium the same for stocks and bonds?

    Take a look at historical equity risk premium and credit spreads in the United States, which suggest that equities carry ... Read Answer >>
  5. How do I calculate insurance premium tax?

    Find out how your health insurance premiums can affect your income taxes, including when you may be able to deduct premium ... Read Answer >>
  6. How can I calculate the carrying value of a bond?

    Learn what the carrying value of a bond means, how it can change and the easiest way to calculate a bond's carrying value ... Read Answer >>
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center