Explanation: Premium valuation refers to a situation where an asset or company is valued at a higher price compared to its perceived fair market value. This term is often used in the context of investment and finance, where investors are willing to pay a premium for an asset that they believe has greater potential or value in the future.1 In the case of a stock, for example, if an investor believes that a company's growth prospects are strong, they may be willing to pay a premium valuation, meaning they are willing to pay a higher price per share compared to the company's perceived intrinsic value. This concept is related to the idea of a premium bond, where a bond trades at a premium due to its higher interest rate compared to current market rates.1 In summary, premium valuation reflects the market's confidence in an asset's future potential and is often associated with growth investments.
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