Bid–offer spread

As a spread (of English. Spread for margin ) is called in the economy generally, the difference between two same unit to compare sizes. As an indicator of the spread is particularly used in the securities trade and economics.

Equity-related spreads

As a spread or bid-ask spread is called the exchange and off- organized trade the spread between the bid and ask price. The purchase of a market instrument is carried at the higher ask price (offer in the market ) and sales at the lower bid price ( market demand ). A high bid-ask spread is an indicator of lack of liquidity in a market.

Interest-rate spreads

When comparing two rates one speaks of the interest rate spread. It can be differentiated by maturity or credit quality. The difference between long-term and short-term rates is called the slope of the term structure. Usual is a comparison between 10-year and 3 -month interest rates.

The comparison of the yields of the same maturity but different credit qualities is called a credit spread. For example, it is common practice not to provide absolute returns with a corporate bond, but rather the credit spread ( excess return ) over a viewed as a largely risk-free government bond top credit ratings.

Forward market -based spreads

In the technical language of futures trading is meant by a spread a carefully planned combined futures business. This is characterized by the fact that the individual components of the same, although usually wear matching economic traits, but (for example, in their term ) to distinguish clearly the least in one of their typical characteristics from each other.

Absolute and homogenized Spread

When trading warrants a distinction between the absolute and the homogenized spread. The former is the real difference between ask and bid prices, which has a warrant. To make the spread of warrants with different ratios comparable, however, it is necessary to be adjusted for this ratio. By dividing the absolute spreads through the ratio gives the homogenized spread.