Spread and spread (spread)

The difference between the offered price (ask price) and the demand price (bid price) of a financial instrument (the difference between the bid and offer price of a financial instrument: bidask spread). – The difference in yield between a given bond and one that corresponds to the respective general market index (the difference between the rate of return on a given bond and that on a benchmark used by the market). – The higher price paid for a newly issued share in a private sale to investors as opposed to the price paid by underwriters (the excess of the price at which shares are offered for public sale over the price paid for the same shares by an underwriter). – The difference between the yields of securities of the same type but denominated in different currencies (foreign exchange spread; currency spread). – In the case of options, a straddle, namely the simultaneous purchase and sale of an option for the same underlying commodity but for delivery in different months (the simultaneous purchase and sale of futures or options contracts for the same commodity but for delivery in different months). – The difference between a call option and a put option (the difference in the value of two options, when the value of the one sold exceeds the value of the one bought). – The spread between Treasury securities and nonTreasury papers that are identical in all respects except for the quality rating; the spread thus will show the additional yield that could be earned from a paper which has a higher risk). – In the case of fixed exchange rates, the area that is left to the free market before the central bank intervenes. – In the case of life insurance, the netting of the total return for a year depending on the guaranteed actuarial interest rate. – See Flight to quality, trading range, bull spread, intermarket spread, intervention points, option, combined, option selling, proportional, spread risk, straddle, subprime crisis, exchange rate, interest rate differential. – Cf. Annual Report 2004 of BaFin, p. 155 (on spread in the sense of ).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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