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Premium.
Premium
One or more of the following market conditions may explain why a bond is selling at a premium (to face value): * Interest rates went down (causing value to go up) * The credit rating for the company issuing the stock went up * The company issuing the bonds has offered to buy outstanding debt at a premium * If convertible bond (to stock), the underlying stock went above a critical value making the bond more valuable when converted
The Conversion Premium is the amount by which the current price of a convertible security exceeds the current market value of the stock into which it may be converted. For example, a bond with a price of $110, convertible into 20 units of stock, trading at $5.10 (totalling $102) would have a conversion premium of $8.
If a bond's price is greater than its Face Value, it is said to be "in premium" e.g. if the price is 105 with a FV of only 100. If the market price is below the Face Value, it is said to be "in discount" while should the market price equal the FV, the bond is said to be "at par".
If you are referring to the high value premium bond winners table on the NS&I website, the Holding is the total amount of premium bonds held and the Bond Value is the block of premium bonds the winning number fell in, eg Holding £30,000, Block Value £1000 means that the winner holds 30,000 premium bonds and the winning number fell within a block of 1000 consecutively numbered bonds.
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Premium
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Premium Bond was created in 1956.
When bonds are sold for more than face value, the carrying value is equal to the face value plus any premium. The premium is the excess amount paid by the investors over the face value of the bond and is amortized over the life of the bond.
The price of the bond decreases; the inflation premium would increase the market interest rate, which in bond valuation is located in the denominator, and the coupon payment rate is located in the numerator. When calculating the NPV of future coupon payments, as the denominator or market interest rate + inflation premium increases, the Net Present Value of future coupon payments decreases and the overall value of the bond decreases as well. The price of the bond decreases; the inflation premium would increase the market interest rate, which in bond valuation is located in the denominator, and the coupon payment rate is located in the numerator. When calculating the NPV of future coupon payments, as the denominator or market interest rate + inflation premium increases, the Net Present Value of future coupon payments decreases and the overall value of the bond decreases as well.
One or more of the following market conditions may explain why a bond is selling at a premium (to face value): * Interest rates went down (causing value to go up) * The credit rating for the company issuing the stock went up * The company issuing the bonds has offered to buy outstanding debt at a premium * If convertible bond (to stock), the underlying stock went above a critical value making the bond more valuable when converted
The bond price exceeds the par price when issued at a premium and declines to the par value as it gets closer to maturity.
The issuance price will not depend on: 3. Method used to amortize the bond discount or premium When issuers estimate an offer price, they need to estimate the risk premium over the riskless securities, in percentage points, assess the effective interest rate for the given maturity, and assume a face value, usually 1,000. These values have to be plugged in the formula based on Time Value of money. They don't need to worry about how a purchaser will amortize the premium or accrue the discount, which is done for tax purposes.
Bond premiums refer to bonds that are issued at a price above its face value. for example, if the market rate for a bond is 8% and the stated rate on the bond is 9% then it would be a premium bond. Bond discounts refer to bonds that are issued at a price below its face value. For example, if the market rate for a bond is 9% and the stated rate on the bond is 10%, then it would be a discount bond.
The Conversion Premium is the amount by which the current price of a convertible security exceeds the current market value of the stock into which it may be converted. For example, a bond with a price of $110, convertible into 20 units of stock, trading at $5.10 (totalling $102) would have a conversion premium of $8.