Economic Spread

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Dictionary Says

Definition of 'Economic Spread'

1. A performance metric that is equal to the difference between a company's weighted average cost of capital (WACC) and its return on invested capital (ROIC).

2. The difference between the real rate of return on an investment and the rate of inflation in the economy.
Investopedia Says

Investopedia explains 'Economic Spread'

1. Economic spread is a measure of a company's ability to make money on its investments. If the cost of capital exceeds the return on invested capital, the company is losing money:  what the company is doing with the capital is not providing enough to cover the cost of borrowing or using it.

2. Economic spread is important for evaluating the returns of a pension plan. The value of its invested funds may be increasing at what seems to be a acceptable level, but if the invested capital is not growing at a rate above inflation, the investment is actually losing its value on an annual basis. This nominal loss results from the fact that the invested capital will not be able to buy as much for the investor in the future as it can in the present time.
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'Economic Spread'

  • CFA Level 1 Study Guide - Global Economic Analysis - Spread ...

    http://www.investopedia.com/exam-guide/cfa-level-1/global-economic-analysis/spread.asp
    ... 5. Global Economic Analysis: 5.1 Introduction; 5.2 Production Possibility Curves;
    5.3 Trade ... and Interest Rate Parity; 5.9 Foreign Exchange; 5.10 Spread Calculations ...

  • EVA: What Does It Really Mean? | Investopedia

    http://www.investopedia.com/university/EVA/EVA5.asp
    ... (ROGIC is similar to return on gross assets (ROGA).) Economic spread, which expresses
    economic dollars in percentage terms, is the returns-metric analogue to ...

  • Series 7 Study Guide - Derivatives - Spread Option Strategies ...

    http://www.investopedia.com/exam-guide/series-7/derivatives/option-spread-strategy.asp
    ... Derivatives - Spread Option Strategies. The ... way. A spread has the same
    risk-reducing effect as covering, but it is more cost-effective. ...

  • Spread-To-Pip Potential: Which Pairs Are Worth Day Trading?

    http://www.investopedia.com/articles/forex/10/spread-pip-potential-pairs-day-trading.asp
    ... change over time, and during times of great volatility the spread becomes less ...
    Transaction, translation and economic risks can affect a company's balance sheet ...

  • Spread Out Risk With Sector-Based ETFs

    http://www.investopedia.com/articles/exchange-traded-funds/09/investing-with-sector-etfs.asp
    Spread Out Risk With Sector-Based ETFs. ... These factors could include: Measures
    of economic activity; Monetary policy; Interest rates; ...

  • CFA Level 1 Study Guide - Global Economic Analysis - Forward ...

    http://www.investopedia.com/exam-guide/cfa-level-1/global-economic-analysis/forward-market.asp
    ... 5. Global Economic Analysis: 5.1 Introduction; 5.2 Production Possibility Curves;
    5.3 Trade ... and Interest Rate Parity; 5.9 Foreign Exchange; 5.10 Spread Calculations ...

  • What causes a recession?

    http://www.investopedia.com/ask/answers/08/cause-of-recession.asp
    According to the National Bureau of Economic Research (NBER), recession is defined
    as "a significant decline in economic activity spread across the. ...

  • How To Pay Your Forex Broker

    http://www.investopedia.com/articles/forex/08/forex-commission-spread.asp
    ... Some brokers even offer you the choice of either a fixed spread or a variable ...
    Transaction, translation and economic risks can affect a company's balance sheet. ...

  • Spotting A Market Bottom

    http://www.investopedia.com/articles/economics/09/spotting-a-market-bottom.asp
    ... in the volume on downward moves, a large increase in the volume on upward moves,
    double bottom patterns, improving economic numbers, the spread on high yield ...

  • What are the determinants of a stock's bid-ask spread?

    http://www.investopedia.com/ask/answers/06/bidaskspread.asp
    ... What are the determinants of a stock's bid-ask spread? Stock ... spread. Another
    important aspect that affects the bid-ask spread is volatility. ...

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