Risk Terms
Spread Risk
Definition
What is Spread Risk?
The risk that a bond's yield spread widens relative to its benchmarkA reference index or rate used to evaluate a fund's performance., reducing its price.
Example in practice
How This Looks in Practice
Corporate spreads widen during a recessionA broad and material decline in economic activity lasting more than a brief period. even though government yields are unchanged.
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Related Terms
Risk Terms
Market Risk
The possibility of loss because broad market prices or rates move against an investment.
Risk TermsCredit Risk
The possibility that a borrower or issuer will fail to make promised payments or suffer a downgrade.
Risk TermsInterest-Rate Risk
The possibility that changing market interest rates will reduce an investment's value or income appeal.
MiscellaneousBusiness Day
A day on which relevant financial institutions and markets are open for normal processing.