Premium

1. 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. The amount payable by an insured to the insurer in return for the protection set out in the terms of the insurance policy.
3. A bond trading in the market at a premium has a market value greater than its par value.
4. A foreign currency trading at a premium in the forward foreign exchange market is stronger in the forward market, than in the spot market.

See also

• Discount
• Forward premium
• Insurance
• Option holder
• Redemption