- Banking. The percentage difference between the interest rate charged on a bank loan and the lender's cost of funds. Contrast with Net Interest Margin.
- Futures. The simultaneous purchase and sale of futures contracts in the same financial instrument for delivery in different months, or in different but related markets.
- Securities. (1) in underwriting, the difference between the purchase price paid by a dealer acting as principal to an issuer of securities and the price paid by investors when a new offering of securities is sold. Also known as gross spread; and (2) the difference between bid and asked prices on stocks or bonds traded over-the-counter.
- Finance. A put and call option on the same security.
- Foreign Exchange.The difference in price between a bid and offer In the spot market it is known as spot spread.
Banking: difference between cost of funds and lending rate.
Bonds: difference between yields on securities of the same quality but different maturities; also difference between yields on securities of the same maturity but different qualities.
Stocks: difference between bid and offer prices; also, difference between high and low prices of a particular security over a given period.
Underwriting: difference between the proceeds an issuer of a new security receives and the price paid by the public for the issue.
Commodities: in futures trading, the difference in price between delivery months in the same market, or between different or related contracts. See also mob spread; nob spread; ted spread.
Fixed-income securities: (1) difference between yields on securities of the same quality but different maturities. For example, the spread between 6% short-term Treasury bills and 10% long-term Treasury bonds is 4 percentage points. (2) difference between yields on securities of the same maturity but different quality. For instance, the spread between a 10% long-term Treasury bond and a 14% long-term bond of a B-rated corporation is 4 percentage points, since an investor's risk of default is so much less with the Treasury bond. See also yield spread.
Foreign exchange: spreading one currency versus another, or multiple spreads within various currencies. An example would be a long position in the U.S. dollar versus a short position in the Japanese yen or the Euro. An example of an intermonth spread would be a long March spot position in Swiss francs versus a short March position in the same currency. Spreads are frequently done in cash and futures markets. Interest rate differentials often have significant impact.
Options: position usually consisting of one long call and one short call option, or one long put and one short put option, with each option representing one "leg" of the spread. The two legs, if taken independently, would profit from opposite directional price movements. Spreads usually have lower cost and lower profit potential than an outright long option. They are entered into to reduce risk, or to profit from the change in the relative prices of the options. See also bear spread; bull spread; butterfly spread; calendar spread; credit spread; debit spread; diagonal spread; option; price spread; selling the spread; vertical spread.
Stocks and bonds: (1) difference between the bid and offer price. If a stock is bid at $45 and offered at $46, the spread is $1. This spread narrows or widens according to supply and demand for the security being traded. See also bid-asked spread; dealer spread. (2) difference between the high and low price of a particular security over a given period.
Underwriting: difference between the proceeds an issuer of a new security receives and the price paid by the public for the issue. This spread is taken by the underwriting syndicate as payment for its services. A security issued at $100 may entail a spread of $2 for the underwriter, so the issuer receives $98 from the offering. See also underwriting spread.
Broadcast:
- in television filming, to focus the lens on a lighting instrument to its widest opening in order to give maximum width to the light distribution, as, for example, in opening the fresnel spotlight (spotlight with an adjustable lens that allows for the variation of transmitted light) to its flooded capacity.
- to stretch a live broadcast to fill the entire time slot allotted it.
Printing: type that runs across a page, rather than type that is set in columns.
Publishing: article or advertisement that appears on two facing pages in a publication. If the two facing pages are in the center of the magazine, the piece is said to appear as a center spread.
the difference between the bid price and asking price.
Example: The buyer offers to pay $1,000 per acre, but the seller asks $1,300. The spread is $300.the difference between the cost of money and the earnings rate.
Example: Good Money Savings and Loan pays an average interest rate of 10% to its depositors. It earns an average of 12% on its investments. The 2-point spread is adequate to pay operating expenses and leave some profit.
