Financial Derivative Terms - Z
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
- Z Bond
- See Mortgage Backed Securities-Accrual Bonds.
- Zero Cost Option
- Any strategy that involves financing an option purchase by the simultaneous sale of another of equal value. See also Collar, Cylinder, and Participating Forward.
- Zero Coupon Bond
- A bond that does not pay any interest during its life, but is initially sold at a discount (less than face value) and pays the face value at maturity.
- Zero Coupon Swap
- An off-market swap in which either or both of the counterparties make one payment at maturity. Usually it is only the fixed-rate payments that are deferred. The party not receiving payment until maturity obviously incurs a greater credit risk than it would with a vanilla swap. The swap is advantageous for a company that will not receive payment for a project until it is completed or to hedge zero - coupon liabilities, such as zero - coupon bonds.
- Zero Coupon Yield Curve
- Also known as the spot curve or spot yield curve, it is a graph which plots zero coupon interest rates (rates based on one payment) against time to maturity.
- Zero Exercise Price Option
- A European call option with a strike price of zero or close to zero, usually traded in countries where there may be obstacles pertaining to the transfer of securities especially stock. The purchaser of the option will definitely exercise it, so it is the same as owning the underlying asset and the seller has full offsetting participation in the stock price.
Disclaimer
With respect to this document, FinancialCAD® Corporation ("FINCAD") makes no warranty either express or implied, including, but not limited to, any implied warranty of merchantability or fitness for a particular purpose. In no event shall FINCAD be liable to anyone for special, collateral, incidental, or consequential damages in connection with or arising out of the use of this document or the information contained in it. This document should not be relied on as a substitute for your own independent research or the advice of your professional financial, accounting or other advisors.
This information is subject to change without notice. FINCAD assumes no responsibility for any errors in this document or their consequences and reserves the right to make changes to this document without notice.