Nominal Yield Spread

AAA

DEFINITION of 'Nominal Yield Spread'

The spread, expressed in percent or basis points, that when added to the yield at one point on the Treasury yield curve equals the discount factor that will make a security's cash flows equal to its current market price.

INVESTOPEDIA EXPLAINS 'Nominal Yield Spread'

Nominal yield spreads are a convention frequently used in pricing certain types of mortgage-backed securities (MBS). These MBSs are priced at a spread over the interpolated Treasury curve at the point equal to their weighted average life.

RELATED TERMS
  1. Discount Rate

    The interest rate charged to commercial banks and other depository ...
  2. Nominal Yield

    The coupon rate on a bond. The nominal yield is the interest ...
  3. Yield Spread

    The difference between yields on differing debt instruments, ...
  4. Yield Spread Premium

    A form of compensation that a mortgage broker, acting as the ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, ...
  6. Bond

    A debt investment in which an investor loans money to an entity ...
Related Articles
  1. Corporate Bonds: An Introduction To ...
    Bonds & Fixed Income

    Corporate Bonds: An Introduction To ...

  2. The Impact Of An Inverted Yield Curve
    Bonds & Fixed Income

    The Impact Of An Inverted Yield Curve

  3. Interest Rates And Your Bond Investments
    Investing Basics

    Interest Rates And Your Bond Investments

  4. Advanced Bond Concepts
    Bonds & Fixed Income

    Advanced Bond Concepts

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center