Interest rates have been steady at 6% for B-rated bonds, but the Fed decided to lower rates half a point. The company that issued bonds at 8.5% five years earlier, and which still has 15 years to go until they are paid off, seizes the opportunity to buy back their own bonds...at a premium...refinance them, and issue new paper at a cheaper 5.5%.
The phrase "at a premium" usually refers to bond redemptions in this vein, such that the issuer pays something like 102 cents on the dollar to buy back their bonds, and presumably reissue paper at cheaper interest rates. The phrase also refers to equity transactions, when Amazon or some other company buys the shares of another company "at a premium"...like, the shares of Shmears, the greatest seller of bagel spread, were trading at $14 last week and, after Amazon bid $17 a share to own the whole company, those shares are said to have been sold "at a premium" to their former $1.14-ish a share price.
Related or Semi-related Video
Finance: What Does "Buy Minus" Mean?3 Views
Finance a la shmoop what does buy minus mean? buy minus is a trading limit or rather a
trading rule given by a client wanting to acquire stock when it goes on flash
sale think Macy's white-flower day sale meets a bolt of lightning you know so [Sale banner outside Macy's and lightning flashes]
how's that work well Bobby bargain hunter sees the
highly volatile whatever dot-com trading at 8250 a share but notes that in the
last week it has been as high as 88 and as low as 75 Bobby wants to be long the
stock ie own it but doesn't want to pay retail price for it ie a "market
order" would just buy that stock at whatever price its trading at this [Market price appears]
moment so he puts in a buy minus order with a limit of 72
if the stock suddenly gaps down to that level he'll be the proud new owner of a [Bobby with a pile of stock]
hundred shares have whatever.com and if it doesn't well then Bobby bargain
hunter will have to shop elsewhere for bargains yeah this guy's such a big
bargain hunter he even hackles at restaurants can you believe that [Waiter approaches Bobby with the check]
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