What does " spread" mean here? It was a scary time in Europe. Spreads on Italian bonds were blowing up, and even France's credit default swaps had more than doubled in three months. What does " spread" mean here? Thanks
Aug 18, 2014 2:17 AM
Answers · 5
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August 18, 2014
The spread is the difference between the buying and selling price. The difference tends to enlarge in times of uncertainty.
August 18, 2014
difference in interest rates between different securities here, in italy interest rate on short term treasury bonds>> interest rate on long term T bonds, so the spread or the difference was getting bigger. Interest rate increased because risk of default and drop in ratings of the bond/ investors were taking more risks on short term than on long terms, so to compensate them for short term risk, i is high.
August 18, 2014
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