Legal Definitions - premium stock

Definition: Premium stock is a type of stock that is traded at a higher price than its face value, usually due to high demand or short-selling. It is a type of equity security issued by a corporation.

Example: If a company's stock has a face value of $10 per share, but is being traded at $15 per share, it is considered premium stock.

This example illustrates how premium stock is traded at a higher price than its face value. Investors are willing to pay more for this stock because they believe it will increase in value, or they need to buy it to cover a short position.