Time premium
Also called time value, the amount by which the option price exceeds its intrinsic value. The value of an option beyond its current exercise value representing the optionholder's control until expiration, the risk of the underlying asset, and the riskless return. |
Similar financial terms
Turnaround timeTime available or needed to effect a turnaround.
Times-interest-earned ratio
Earnings before interest and tax, divided by interest payments.
Time value of money
The idea that a dollar today is worth more than a dollar in the future, because the dollar received today can earn interest up until the time the future dollar is received.
Time value of an option
The portion of an option's premium that is based on the amount of time remaining until the expiration date of the option contract, and that the underlying components that determine the value of the option may change during that time. Time value is generally equal to the difference between the premium and the intrinsic value.
Time to maturity
The time remaining until a financial contract expires. Also called time until expiration.
Time until expiration
The time remaining until a financial contract expires. Also called time to maturity.
Time draft
Demand for payment at a stated future date.
Time deposit
Interest-bearing deposit at a savings institution that has a specific maturity.
Real time
A real time stock or bond quote is one that states a security's most recent offer to sell or bid (buy). A delayed quote shows the same bid and ask prices 15 minutes and sometimes 20 minutes after a trade takes place.
Market timer
A money manager who assumes he or she can forecast when the stock market will go up and down.
Cash flow time-line
Line depicting the operating activities and cash flows for a firm over a particular period.
Just-in-time
Just-in-time production is a system in which materials, parts and finished products are delivered at the precise time they are needed. This encourages lower stock holdings, shorter lead times, quicker supply chains, better customer contact and relations, greater efficiency and a more profit-focused organisation.
Liquidity premium
The amount that forward interest rates exceed expected future spot interest rates.
Term premiums
Excess of the yields to maturity on long-term bonds over those of short-term bonds.
Tender offer premium
The premium offered above the current market price in a tender offer.
Single-premium deferred annuity
An insurance policy bought by the sponsor of a pension plan for a single premium. In return, the insurance company agrees to make lifelong payments to the employee (the policyholder) when that employee retires.
Risk premium approach
The most common approach for tactical asset allocation to determine the relative valuation of asset classes based on expected returns.
Risk premium
The reward for holding the risky market portfolio rather than the risk-free asset. The spread between Treasury and non-Treasury bonds of comparable maturity.
Premium bond
A bond that is selling for more than its par value.
Premium
(a) Amount paid for a bond above the par value. (b) The price of an option contract; also, in futures trading, the amount the futures price exceeds the price of the spot commodity.
Option premium
The option price.
Call premium
Premium in price above the par value of a bond or share of preferred stock that must be paid to holders to redeem the bond or share of preferred stock before its scheduled maturity date.
Conversion premium
The percentage by which the conversion price in a convertible security exceeds the prevailing common stock price at the time the convertible security is issued.
Premium income
The income made by an insurance company resulting from premiums paid for insurance products.
