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
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Answers · 5
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You need this site for the definitions of financial terms: http://www.investopedia.com/
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The spread is the difference between the buying and selling price. The difference tends to enlarge in times of uncertainty.
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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.
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