Asked by: Lijin Mauhs
asked in category: General Last Updated: 2nd March, 2020

What does unamortized premium mean?

DEFINITION of Unamortized Bond Premium
Unamortized bond premium refers to the amount between the face value and the amount the bond was sold at, minus the interest expense. It is what remains of the bond premium to be written off against expenses over the bond's life.

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In this regard, what does unamortized mean?

to liquidate or extinguish (a mortgage, debt, or other obligation), especially by periodic payments to the creditor or to a sinking fund.

Beside above, what is unamortized debt expense? Unamortized bond discount. The bond issuer writes off the full amount of the bond discount over the remaining term of the bond with which it is associated. The amount written off is charged to interest expense. The amount of the bond discount that has not yet been written off is called the unamortized bond discount.

Keeping this in consideration, what is a debt premium?

A premium bond is a bond trading above its face value or in other words; it costs more than the face amount on the bond. A bond might trade at a premium because its interest rate is higher than current rates in the market.

How do you calculate bond premium?

The total bond premium is equal to the market value of the bond less the face value. For instance, with a 10-year bond paying 6% interest that has a $1,000 face value and currently costs $1,080 in the market, the bond premium is the $80 difference between the two figures.

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