spread investment & finance definition

The difference between a security’s purchase price and its selling price. The term is used in many different contexts. For underwriters of bond or stock offerings, the spread is the difference between what underwriters pay for the security and what they sell it for; the spread provides the basic compensation to the underwriters. In futures trading, the spread is called a bid/ask spread. It is the difference between what a futures contract can be purchased at and what it can be sold at. The ask price, or the price at which something is sold, nearly always will be higher than the bid price. Market makers make their profit on the spread.