Premium Definition | Becker
Accounting Dictionary
Premium
- In bond accounting, bonds are sold at a premium if the market interest rate is less than the stated interest rate. The bond has to sell at a premium because investors cannot obtain a higher interest rate in other investments. See also discount and stated interest rate and effective interest rate and par value (of a bond) and bond selling price. The extra amount paid for a security over and above its intrinsic or par value.
Related Terms:
Discount [FAR]Effective Interest Rate [FARBAR]Par Value (of a Bond) [FAR]Bond Selling Price [FAR]Back to Dictionary