What is premium?
The difference between the price paid for a fixed-income security and the security's face amount at issue is referred to as a premium if that price is higher than par. The purchase price of an insurance policy or the regular payments required by an insurer to provide coverage for a defined period of time.
What are the different types of premiums?
The premium may also contain a sales agent's or broker's commissions. The most common types of coverage are auto, health, and homeowners insurance. Premiums are paid for many types of insurance, including health, homeowners, and rental insurance. A common example of an insurance premium comes from auto insurance.
What does it mean to trade at a premium?
Generically, a security trading above its intrinsic or theoretical value is trading at a premium (in contrast to a discount ). The difference between the price paid for a fixed-income security and the security's face amount at issue is referred to as a premium if that price is higher than par.