Premium
1. Options.
The amount payable by the buyer of an option to the option writer for the right to deal on the terms contained in the option.
2. Insurance.
The amount payable by an insured to the insurer in return for the protection set out in the terms of the insurance policy.
3. Bonds.
A bond trading in the market at a premium has a market value greater than its par value.
4. Foreign currency.
A foreign currency trading at a premium in the forward foreign exchange market is stronger in the forward market, than in the spot market.
5.
Higher-quality, in relation to a product or service.
The premium quality is normally reflected in higher pricing or other additional costs.
6.
An additional amount within a purchase price, reflecting additional benefits.
For example, a control premium in valuing a company.
7. Investment returns.
Additional return required or expected by investors in certain assets.
For example, a term premium on longer maturity bonds.
