A form of government borrowing organised by the National Savings department. Investors buy serially numbered premium bonds at a cost of £1 each. Each month a random draw is made of numbers with a range of prizes from £50 to £1 million. The total value of the prize fund is calculated by reference to a percentage of the total value of premium bonds outstanding. An investor may redeem bonds at par value at any time. Any winnings are tax free. Premium bonds are not investments. Dresdner Kleinwort Wasserstein financial glossary
Financial and business terms. 2012.