WHAT IS A PREMIUM BOND OR PREMIUM SAVING BONDS MEANING
PREMIUM BOND
Bonds that are trading above its par value.
A premium bond is a bond that is trading above its
par value. A bond will trade at a premium when it offers coupon rate which is
much more value than prevailing or current interest rates.
This is because that the investors want a higher
return, and will pay more for it. It is not related with insurance it is a kind
of saving bond or instrument. It is helpful in improving money supply in
economy which is feature of bank .It also circulate money.
It is a
special kind of bond issued in nations
such as the United Kingdom(UK,GB) and Canada. In the U.K., premium bonds are
called lottery bond issued by the British government National Savings & Investment scheme . In
Canada, the Canada Premium Bond, first introduced in year 1998, offers a much
high interest rate at the time of issue
than a Canada Savings Bond.
