What is a Premium Bond?
A premium bond is a bond trading above its original value meaning it costs more than the face amount on the bond. A bond might trade at a premium because its interest rate is higher than the current market interest rates

Example:
A bond that was issued at a value of $2,000 might trade at $2,050 or a $50 premium. 50$ is the difference in value. Investors can then buy and sell a 10-year bond before the bond matures in ten years. If the bond is held until maturity, the investor receives a return amount of $2,000 which is the original value of the bond.

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