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Maturity spread

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Definition of Maturity spread

Maturity Spread Image 1

Maturity spread

The spread between any two maturity sectors of the bond market.



Related Terms:

Average maturity

The average time to maturity of securities held by a mutual fund. Changes in interest rates
have greater impact on funds with longer average life.


Balloon maturity

Any large principal payment due at maturity for a bond or loan with or without a a sinking
fund requirement.


Bull spread

A spread strategy in which an investor buys an out-of-the-money put option, financing it by
selling an out-of-the money call option on the same underlying.


Credit spread

Related:Quality spread


Current maturity

Current time to maturity on an outstanding debt instrument.
Current / noncurrent method
Under this currency translation method, all of a foreign subsidiary's current
assets and liabilities are translated into home currency at the current exchange rate while noncurrent assets
and liabilities are translated at the historical exchange rate, that is, the rate in effect at the time the asset was
acquired or the liability incurred.



Effective spread

The gross underwriting spread adjusted for the impact of the announcement of the common
stock offering on the firm's share price.


Gross spread

The fraction of the gross proceeds of an underwritten securities offering that is paid as
compensation to the underwriters of the offering.


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Held-to-Maturity Security

A debt security for which the investing entity has both the positive
intent and the ability to hold until maturity.


Horizontal spread

The simultaneous purchase and sale of two options that differ only in their exercise date.


Intermarket spread swaps

An exchange of one bond for another based on the manager's projection of a
realignment of spreads between sectors of the bond market.


Intramarket sector spread

The spread between two issues of the same maturity within a market sector. For
instance, the difference in interest rates offered for five-year industrial corporate bonds and five-year utility
corporate bonds.


Maturity

For a bond, the date on which the principal is required to be repaid. In an interest rate swap, the
date that the swap stops accruing interest.


Maturity

The date or the number of days until a security is due to be paid or
a loan is to be repaid


Maturity

Time at which a bond can be redeemed for its face value.


Maturity

The time when a policy or annuity reaches the end of its span.


Maturity date

The date when the issuer returns the final face value of a bond
to the buyer.


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Maturity Date

Date on which a debt is due for payment.


Maturity factoring

Factoring arrangement that provides collection and insurance of accounts receivable.



Maturity phase

A phase of company development in which earnings continue to grow at the rate of the
general economy. Related: Three-phase DDM.


maturity premium

Extra average return from investing in longversus short-term Treasury securities.


Maturity value

Related: par value.


Option-adjusted spread (OAS)

1) The spread over an issuer's spot rate curve, developed as a measure of
the yield spread that can be used to convert dollar differences between theoretical value and market price.
2) The cost of the implied call embedded in a MBS, defined as additional basis-yield spread. When added to the
base yield spread of an MBS without an operative call produces the option-adjusted spread.


Original maturity

maturity at issue. For example, a five year note has an original maturity of 5 years; one
year later it has a maturity of 4 years.


Projected maturity date

With CMOs, final payment at the end of the estimated cash flow window.


Quality spread

Also called credit spread, the spread between Treasury securities and non-Treasury securities
that are identical in all respects except for quality rating. For instance, the difference between yields on
Treasuries and those on single A-rated industrial bonds.


Relative yield spread

The ratio of the yield spread to the yield level.


Remaining maturity

The length of time remaining until a bond's maturity.


Maturity Spread Image 4

Return-to-maturity expectations

A variant of pure expectations theory which suggests that the return that an
investor will realize by rolling over short-term bonds to some investment horizon will be the same as holding
a zero-coupon bond with a maturity that is the same as that investment horizon.



Spread

1) The gap between bid and ask prices of a stock or other security.
2) The simultaneous purchase and sale of separate futures or options contracts for the same commodity for delivery in different months.
Also known as a straddle.
3) Difference between the price at which an underwriter buys an issue from a firm
and the price at which the underwriter sells it to the public.
4) The price an issuer pays above a benchmark fixed-income yield to borrow money.


Spread

For options, a combination of call or put options on the same stock
with differing exercise prices or maturity dates.


spread

Difference between public offer price and price paid by underwriter.


Spread

The difference between items typically between two rates of interest or currencies.


Spread income

Also called margin income, the difference between income and cost. For a depository
institution, the difference between the assets it invests in (loans and securities) and the cost of its funds
(deposits and other sources).


Spread strategy

A strategy that involves a position in one or more options so that the cost of buying an
option is funded entirely or in part by selling another option in the same underlying. Also called spreading.


Spreadsheet

A computer program that organizes numerical data into rows and columns on a terminal screen,
for calculating and making adjustments based on new data.


Stated maturity

For the CMO tranche, the date the last payment would occur at zero CPR.


TED spread

Difference between U.S. Treasury bill rate and eurodollar rate; used by some traders as a
measure of investor/trader anxiety.


Term to maturity

The time remaining on a bond's life, or the date on which the debt will cease to exist and
the borrower will have completely paid off the amount borrowed. See: maturity.


Term to Maturity

Period of time from the present to the redemption date of a bond.


Time to maturity

The time remaining until a financial contract expires. Also called time until expiration.


Vertical spread

Simultaneous purchase and sale of two options that differ only in their exercise price. See:
horizontal spread.


Weighted average maturity

The WAM of a MBS is the weighted average of the remaining terms to maturity
of the mortgages underlying the collateral pool at the date of issue, using as the weighting factor the balance
of each of the mortgages as of the issue date.


Weighted average remaining maturity

The average remaining term of the mortgages underlying a MBS.


Yield spread strategies

Strategies that involve positioning a portfolio to capitalize on expected changes in
yield spreads between sectors of the bond market.


Yield to maturity

The percentage rate of return paid on a bond, note or other fixed income security if you
buy and hold it to its maturity date. The calculation for YTM is based on the coupon rate, length of time to
maturity and market price. It assumes that coupon interest paid over the life of the bond will be reinvested at
the same rate.


Yield to Maturity

The measure of the average rate of return that will be earned on a
debt security held until it matures


Yield to maturity

A measure of the average rate of return that will be earned
on a bond if held to maturity.


yield to maturity

Interest rate for which the present value of the bond’s payments equals the price.


Intermarket sector

spread The spread between the interest rate offered in two sectors of the bond market for
issues of the same maturity.


Risk premium

The reward for holding the risky market portfolio rather than the risk-free asset. The spread
between Treasury and non-Treasury bonds of comparable maturity.



 

 

 

 

 

 

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