1. Banking. The difference between the interest rate that a financial institution must pay to attract deposits and the rate at which money can be loaned.
2. Securities. The difference between the highest price a buyer will pay for a security (the bid price) and the lowest price at which a seller will sell a security (the asked price).
3. Securities. The simultaneous buying and selling of one or more options or futures contracts on the same security in order to profit from the price difference.
4. In investment banking, the difference between the price the underwriter pays the issuer of the security and the price paid by the public in the initial offering. • The spread compensates the underwriter for its services; it is made up of the manager’s fee, the underwriter’s discount, and the selling-group concession or discount. — Also termed (in sense 4) gross spread; underwriting spread.
