Spread Information
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Spread Information
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In finance, a spread refers to the difference between two prices, rates, or yields One of the most common types is the bid-ask spread, which refers to the gap between the bid (from buyers) and the ask (from sellers) prices of a security or asset Spread can also refer to the difference in a trading position – the gap between a short position (that is, selling) in one futures contract or currency and a long position (that is, buying) in another
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The middle rate, also called mid and mid-market rate, is the exchange rate between a currency's bid and ask rates in the foreign exchange market.
Spread betting refers to speculating on the direction of a financial market without actually owning the underlying security.
A two-way quote indicates the current bid price and current ask price of a security; it is more informative than the usual last-trade quote.
A futures spread is an arbitrage technique in which a trader takes two positions on a commodity to capitalize on a discrepancy in price.
Quotation is a common term that refers to the highest bid price for a security or commodity and the lowest ask price available for the same asset.
A bid-ask spread is the amount by which the ask price exceeds the bid price for an asset in the market.
Credit Spread vs. Debit Spread: What's the Difference?
After-Hours Trading: Bid and Ask Quote Disparity
Option-Adjusted vs. Zero-Volatility Spread: What's the Difference?
Understanding the Numbers After Bid/Ask Prices
A Breakdown on How the Stock Market Works
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A spread can have several meanings in finance. Generally, the spread refers to the difference between two prices, rates, or yields . In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond , or commodity. This is known as a bid-ask spread.
Spread can also refer to the difference in a trading position – the gap between a short position (that is, selling) in one futures contract or currency and a long position (that is, buying) in another. This is officially known as a spread trade.
In underwriting , the spread can mean the difference between the amount paid to the issuer of a security and the price paid by the investor for that security—that is, the cost an underwriter pays to buy an issue, compared to the price at which the underwriter sells it to the public.
In lending, the spread can also refer to the price a borrower pays above a benchmark yield to get a loan. If the prime interest rate is 3%, for example, and a borrower gets a mortgage charging a 5% rate, the spread is 2%.
The bid-ask spread is also known as the bid-offer spread and buy-sell. This sort of asset spread is influenced by a number of factors:
For securities like futures contracts , options, currency pairs, and stocks, the bid-offer spread is the difference between the prices given for an immediate order—the ask—and an immediate sale – the bid. For a stock option , the spread would be the difference between the strike price and the market value .
One of the uses of the bid-ask spread is to measure the liquidity of the market and the size of the transaction cost of the stock. For example, on Jan. 11, 2022, the bid price for Alphabet Inc., Google's parent company, was $2,790.86 and the ask price was $2,795.47. 1 The spread is $4.61. This indicates that Alphabet is a highly liquid stock, with considerable trading volume.
The spread trade is also called the relative value trade. Spread trades are the act of purchasing one security and selling another related security as a unit. Usually, spread trades are done with options or futures contracts. These trades are executed to produce an overall net trade with a positive value called the spread.
Spreads are priced as a unit or as pairs in future exchanges to ensure the simultaneous buying and selling of a security. Doing so eliminates execution risk wherein one part of the pair executes but another part fails.
The yield spread is also called the credit spread . The yield spread shows the difference between the quoted rates of return between two different investment vehicles. These vehicles usually differ regarding credit quality .
Some analysts refer to the yield spread as the “yield spread of X over Y.” This is usually the yearly percentage return on investment of one financial instrument minus the annual percentage return on investment of another.
To discount a security’s price and match it to the current market price, the yield spread must be added to a benchmark yield curve . This adjusted price is called an option-adjusted spread . This is usually used for mortgage-backed securities (MBS), bonds, interest rate derivatives, and options. For securities with cash flows that are separate from future interest rate movements, the option-adjusted spread becomes the same as the Z-spread.
The Z-spread is also called the yield curve spread and zero-volatility spread . The Z-spread is used for mortgage-backed securities. It is the spread that results from zero-coupon treasury yield curves which are needed for discounting pre-determined cash flow schedule to reach its current market price. This kind of spread is also used in credit default swaps (CDS) to measure credit spread.
A yield spread is the difference between yields on differing debt instruments of varying maturities, credit ratings, issuer, or risk level, calculated by deducting the yield of one instrument from the other. This difference is most often expressed in basis points (bps) or percentage points. Yield spreads are commonly quoted in terms of one yield versus that of U.S. Treasuries, where it is called the credit spread.
The option-adjusted spread (OAS) measures the difference in yield between a bond with an embedded option, such as an MBS, with the yield on Treasuries. It is more accurate than simply comparing a bond’s yield to maturity to a benchmark. By separately analyzing the security into a bond and the embedded option, analysts can determine whether the investment is worthwhile at a given price.
The zero-volatility spread (Z-spread) is the constant spread that makes the price of a security equal to the present value of its cash flows when added to the yield at each point on the spot rate Treasury curve where cash flow is received. It can tell the investor the bond's current value plus its cash flows at these points. The spread is used by analysts and investors to discover discrepancies in a bond's price.
Yahoo! Finance. " Alphabet Inc. (GOOGL) ." Accessed Jan. 11, 2022.
196 other terms for spread of information - words and phrases with similar meaning
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One of the most pivotal time periods for print culture was the Industrial Revolution, where a boom in business demanded innovations in the printing industry. The mechanization of printing allowed for more work to be published more quickly, and an expanded transportation network facilitated greater distribution of this work. This allowed for a much quicker spread of information and ideas. However, such advances in publishing were not met without opposition. Many traditionalists worried that these improvements to the printing industry would lead to the spread of controversial and radical ideas.
Many parallels can be drawn between the impact of publishing innovations during the Industrial Revolution and today. With the rise of smartphones and the age of texting and social media, ideas have the ability to be spread almost instantaneously. The dissemination of information in today’s age is much quicker than that during the Industrial Revolution, making publishing even more susceptible to the spread of false information and radical ideas.
There are many chilling examples of the rate at which false information can be spread, ranging from fear about Ebola to misidentification of suspects in major crimes. For example, after the Boston Marathon Bombing in 2013, a Reddit user posted a picture of a missing Brown University student, claiming he resembled the bombing suspect who had been pictured in a baseball hat. Within hours, Sunil Tripathi’s name had spread all over Facebook and television media and was even trending internationally on Twitter. However, he actually had absolutely nothing to do with the attack.
This is just one example of how easily digitally published content can be disseminated. One post can reach millions of people in a matter of minutes. In an age where many people’s primary source of news and information is social media, it is important to be cautious of what you believe. Always check the validity of sources and do further research before jumping to conclusions.
For an interesting read and more information about misinformation in the hunt for the Boston Bombing suspects, see this article .
For another example of the spread of misinformation, check out this article about Ebola and social media.
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The spread of misinformation disrupts our society and undermines our ability to work together toward the common good.
By Stephen M. Kuebler and Jonathan Beever, UCF Forum columnists
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March 20, 2019
How many of us know how to ground an electrical circuit, or what the difference is between a volt, an amp or a watt? Probably very few.
So, when we need electrical work done, we call an electrician, because they are certified experts in their field. Not deferring to an expert can bring devastating consequences. People have lost their homes to fires caused by do-it-yourself work done incorrectly. Along with cooking, smoking, and wire-chewing squirrels, faulty electrical work is a leading cause of house-fires.
And electrical work is straightforward compared with some challenges we face, like global security, weather prediction, energy, environmental sustainability, socioeconomic inequality, disease and others. Complex problems require complimentary expertise or many experts working together across disciplinary boundaries. Experts are important – necessary, even – to find effective solutions to our toughest problems.
Yet, for some reason, experts often are ignored. It’s a paradox of our times that we are each specialized in our own skill set, and we rely upon one another to function, yet often we are all too eager to dismiss expert judgment in favor of our own.
Take anthropogenic climate change, for example. The science is in and the evidence is overwhelming: Human activity is dramatically changing our planet. Empirical evidence has reached the gold standard for science. Scientists are 99.7 percent certain that human activity drives climate change.
The rest of the developed world is taking action by setting emissions targets, shifting away from fossil fuels, enacting laws, and changing social policy. Yet in the United States, many politicians debate the issue rather than address it, and many lay people dismiss the science.
So why the disconnect? Why are many ignoring expertise?
Easy access to information is one great benefit of the technological world we inhabit.
We think one reason is the rapid rise of access to misinformation. The internet and other forms of rapid communication technology have democratized information, but not necessary knowledge. Easy access to information is one great benefit of the technological world we inhabit. It is now easy to find products, services, videos on how to make things, explanations of how things work, and social and professional groups with whom we can work, play and grow. Yet, all that bandwidth has created a home for misinformation.
Misinformation originates from many sources, including urban myths, statements taken out of context, politically driven agendas, poor investigative reporting, and most nefariously, state and private-sponsored disinformation campaigns. Some bits of misinformation are laughable – such as the idea that the Earth is flat. Others are dangerous – such as the false claims that vaccines cause autism, or that the Sandy Hook shootings never occurred.
But all forms of misinformation share one important consequence: They disrupt our society and undermine our ability to work together toward the common good.
Scientists have studied information dynamics for decades and discovered, long before the internet, that the way misinformation spreads is strikingly similar to a viral disease. If a piece of information spreads quickly enough to a large enough fraction of a population, it can take on a life of its own and effectively become “fact,” even if it’s false.
Each of us can unwittingly become an agent for propagating false information. Anytime we see a meme that reinforces our beliefs, and then repost it, or tell others face-to-face without fact-checking, we can spread the misinformation virus. Here in the United States, a false equivalency has taken root between freedom of speech and the right to express an opinion, but without recognition that we all share an ethical responsibility to vet information and become properly informed before championing a viewpoint.
But we know better. We know that division of labor helps societies advance. Few of us raise our own food, maintain our own defense, cure our own illness, or watch our children 24/7. Instead, we have jobs, and if we are lucky we have thriving careers and areas of specialization. We trade our services to others for income, and through money we trade our own expertise for food, clothing, shelter, education and so on.
We rely upon specialized expertise to make society function.
Policy makers and voters need to support infrastructure that promotes the generation and exchange of real knowledge. This includes funding education.
To solve our problems and achieve our goals, we need to acknowledge and leverage expertise – whether it comes from the chemist, philosopher or electrician. And this idea brings obligations with it. Policy makers and voters need to support infrastructure that promotes the generation and exchange of real knowledge. This includes funding education.
When it comes to acknowledging expertise, the onus is not only on the lay person. Experts, too, have an ethical responsibility to maintain and communicate their credibility. They have a role to play in communicating what they do and how they do it in ways that lay people can understand. This fosters trust in expertise.
Climate scientists must continue to explain their field in spite of its complexity so the lay public can understand why a 1-degree rise in average global temperature really is cause for alarm, and why an exceptionally cold day in February does not mean there is no global-warming problem. And academics have an obligation to help the lay public understand what they do; how their training, teaching and research builds expertise, and how expertise is the key to making progress.
So, the next time you’re tempted to repost a meme or tweet without doing the background work to learn about the issue, stop and think. Because like doing your own electrical wiring – if you’re not an expert – you might burn your house down.
Stephen M. Kuebler is an associate professor of chemistry and optics in the University of Central Florida’s Department of Chemistry and the College of Optics and Photonics. He can be reached at Stephen.Kuebler@ucf.edu .
Jonathan Beever is an assistant professor of ethics and digital culture in the University of Central Florida’s Department of Philosophy and the Texts & Technology doctoral program. He can be reached at Jonathan.Beever@ucf.edu .
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