Updated on March 15, 2023
Spread has several meanings in finance, banking, accounting and stock markets. Spread refers to the difference between two rates, prices, yields or returns.
Spread can be defined as the gap between the ‘ask’ and bid prices of a security like stocks, bonds, currencies or commodites and is known as a bid-ask spread
Spread may refer to the difference in trading position or the gap between a short and long position and is known as a spread trade. In terms of underwriting, spread is defined as the difference between the Underwriter’s cost and the cost at which the Underwriter offers the issue to the public. In the lending business, spread would generally mean the price paid by a borrower above the benchmark yield to avail a loan.