Interest Rate Differential - IRD

A fancy term for the difference in interest rates for two assets that pay out some kind of interest.

You have one 5-year bond with 6% interest. Another bond has a rate of 4.5%. The IRD in that case equals 1.5%.

The figures comes into play in a lot of markets. For a regular person, the housing market is the most common. If you wear $2,000 suits to work and eat lunch at 21 Club, you might use it for fixed income and currency trading. After lunch, you can use IRD to compute a carry trade.

Then...off to the Hamptons.