Yield Spread
Definition Yield spread is a financial term that refers to the difference in yields between two different investments, typically bonds or financial instruments. This difference is a critical indicator of market conditions, risk levels and potential returns on investment. Yield spreads can provide insights into the overall health of the economy and are essential for investors looking to make educated decisions. Components of Yield Spread Nominal Yield: This is the stated interest rate of the bond or financial instrument, expressed as a percentage of its face value.