Discount Spread

Discount Spread
Currency forward points that are subtracted from the spot rate, to obtain a forward rate for a currency. In the currency markets, forward spreads or points are two-way quotes, that is, they have a bid price and an offer price. In a discount spread, the bid price will be higher than the offer price, while in a premium spread, the bid price will be lower than the offer price.

For example, assume a euro spot rate of EUR 1 = 1.4000 / 1.4002 USD, and that six-month interest rates for the euro are higher than for the USD. If the discount spread for six months is 25 / 24, the six-month euro rate will be EUR 1 = 1.3975 / 1.3978 (1.4000 - 0.0025 and 1.4002 - 0.0024).


Investment dictionary. . 2012.

Игры ⚽ Нужен реферат?

Look at other dictionaries:

  • Discount Zertifikat — Bei einem Discountzertifikat (häufig auch Discounter genannt) ein Begriff aus dem Wertpapierbereich handelt es sich um eine in einem Zertifikat verbriefte Terminkonstruktion, bei der eine Kauf Option verkauft wird, die durch einen Basiswert… …   Deutsch Wikipedia

  • Discount window — The discount window is an instrument of monetary policy (usually controlled by central banks) that allows eligible institutions to borrow money from the central bank, usually on a short term basis, to meet temporary shortages of liquidity caused… …   Wikipedia

  • discount store — ▪ merchandising       in merchandising, a retail store that sells products at prices lower than those asked by traditional retail outlets. Some discount stores are similar to department stores in that they offer a wide assortment of goods; indeed …   Universalium

  • option-adjusted spread — ( OAS) (1) A measurement of the return provided to an investor from a financial instrument that is either an option or that includes an option. The option adjusted spread calculations break up a security into separate cash flows. Each of those… …   Financial and business terms

  • Option-adjusted spread — (OAS) is the flat spread which has to be added to the treasury yield curve in a pricing model (that accounts for embedded options) to discount a security payment to match its market price. OAS is hence model dependent. This concept can be applied …   Wikipedia

  • Yield spread premium — The yield spread premium (YSP) is the cash rebate paid to a mortgage broker based on selling an interest rate above the wholesale par rate that the borrower qualifies for. For example, If a mortgage broker offers a borrower a loan of $100,000 at… …   Wikipedia

  • Quantity Discount — An incentive offered to a buyer that results in a decreased cost per unit of goods or materials when purchased in greater numbers. A quantity discount is often offered by sellers to entice buyers to purchase in larger quantities. The seller is… …   Investment dictionary

  • Option adjusted spread — (OAS) is the flat spread over the treasury yield curve required to discount a security payment to match its market price. This concept can be applied to mortgage backed security (MBS), Options, Bonds and any other interest rate… …   Wikipedia

  • Yield curve spread — on a simple mortgage backed security (MBS) is the flat spread over the treasury yield curve required in discounting a pre determined coupon schedule to arrive at its present market price.That is, the MBS yield curve spread is based on a… …   Wikipedia

  • static spread — (1) The difference between two values at a single point in time. For example, the difference between two yields. (2) The calculated spread over the Treasury yield that the investor would realize from all of the cash flows produced by his… …   Financial and business terms

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”