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. Risk Premium

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

    1. The total cost of an option. 2. The difference between the ...
  6. Option Premium

    1. The income received by an investor who sells or "writes" an ...
RELATED FAQS
  1. If a long call is owned on the record date of a stock, is the owner of the option ...

    The owner of a long call for a stock is entitled to a dividend only if the option is exercised prior to the ex-dividend date, ... Read Full Answer >>
  2. What is the theory of asymmetric information in economics?

    The theory of asymmetric information was developed in the 1970s and 1980s as a plausible explanation for common phenomena ... Read Full Answer >>
  3. How does market risk differ from specific risk?

    Market risk and specific risk are two different forms of risk that affect assets. All investment assets can be separated ... Read Full Answer >>
  4. How is perpetuity used in the Dividend Discount Model?

    The basic dividend discount model (DDM) creates an estimate of the constant growth rate, in perpetuity, expected for dividends ... Read Full Answer >>
  5. How can an investor profit from the cyclical nature of the electronics sector?

    An investor can profit from the cyclical nature of the electronics sector in two ways. He can employ sector rotation, shifting ... Read Full Answer >>
  6. What does negative vega mean for credit spreads?

    Greek vega measures an option's sensitivity with respect to a change in the underlying asset's volatility. The vega of an ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    Premium Bonds: Problems And Opportunities

    Learn all about premium bonds and how you can make them work for you.
  2. Bonds & Fixed Income

    Why Stocks Outperform Bonds

    Why have stocks historically produced higher returns than bonds? It's all a matter of risk.
  3. Options & Futures

    Calculating The Equity Risk Premium

    See the model in action with real data and evaluate whether its assumptions are valid.
  4. Fundamental Analysis

    The Equity-Risk Premium: More Risk For Higher Returns

    Learn how the expected extra return on stocks is measured and why academic studies usually estimate a low premium.
  5. Options & Futures

    Collecting Option Premium In The Grain Market

    Believe it or not, there are some great income-generating strategies that are lower in risk.
  6. Economics

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.
  7. Economics

    Modified Internal Rate of Return (MIRR)

    Modified internal rate of return (MIRR) is a variant of the more traditional internal rate of return calculation.
  8. Options & Futures

    How To Trade Orange Juice Options

    How do orange juice options work and which factors determine the orange juice valuations? Here's a sneak peak into the world of orange juice options.
  9. Economics

    Understanding the Fisher Effect

    The Fisher effect states that the real interest rate equals the nominal interest rate minus the expected inflation rate.
  10. Fundamental Analysis

    Explaining the Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio.

You May Also Like

Hot Definitions
  1. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  2. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  3. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  4. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  5. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center