|Definition / notes:||The difference between the prices of two comparable or related securities. Spreads are measured in basis points. One basis point equals 1/100 of a percent. For example, corporate bonds of a comparable maturity and comparable coupon rates will have higher yields than Treasuries to reflect greater default risk, so their yields are often quoted as a spread above the Treasury rate. The more risky the bond issue, the larger is the spread.|
From: Investing in Hedge Funds, Joseph G. Nicholas.