Yield spread
(redirected from Yield Spreads)Yield spread
The difference in yield between different security issues usually securities of different credit quality.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Yield Spread
The difference in yield between two bonds or other debt securities with different credit quality. For example, an investment grade bond and a junk bond have different yields to compensate the bondholder for the risk (or lack of risk). The difference between these is called the yield spread.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
yield spread
The difference in yield, at a given time, between two bonds or between different segments of the bond market. For example, the yield spread between AAA-rated bonds and A-rated bonds may be one half of 1% at a particular time. Likewise, the yield spread between long-term taxable and nontaxable bonds may be 2%. Yield spread may be caused by any of various factors including maturity difference, risk difference, or taxability difference.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
Yield spread.
Yield spread describes the difference between the yields on two different debt instruments. For example, you can calculate the yield spread on two bonds, by subtracting the yield on one bond from the yield on the other.
Yield spread is helpful in comparing bonds with different maturities, credit ratings, and tax status. In general, securities with longer maturities tend to have higher yields than those with shorter maturities. And securities with higher credit ratings have lower yields than those with lower ratings.
Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.