Plain-English definitions, reviewed by an independent investor
Spread
A spread is the gap between two prices, rates, or yields — most famously the difference between two bond maturities.
A spread is the gap between two prices, rates, or yields — most famously the difference between two bond maturities.
Spread = Higher Yield − Lower Yield
Why it matters
Spreads signal risk and sentiment; a widening credit spread means investors want more pay for risk.
Common confusion
“Spread” also means the bid-ask gap in trading, a different but related idea.
Frequently Asked Questions
What is a credit spread?
The extra yield of a risky bond over a safe one, used as a fear gauge.
What is bid-ask spread?
The difference between what buyers pay and sellers accept; tight is liquid.