The tranche in a series of mortgage-backed securities that is the last one to receive payment. The Z-Bond is typically considered a high-risk investment.
As the holder of a Z-Bond, you wont receive any periodic payments. Instead, you get all the accrued interest payed out in a lump sum.
In the context of collateralized mortgage obligations (CMO), a Z-Bond is a bond that pay no coupon payments to the holder as long as principal is left to be paid on earlier bonds. Instead of paying out interest on the Z-Bond, the money is used to amortize the principal on the earlier series of bonds more quickly. The interest payable on a Z-Bond is added to its principal balance and becomes payable once there is no more payments to make on all the earlier series of bonds.
A class of mutual fund shares that employees of the fund’s management company are allowed to own.
ZEBRA= Zero Basis Risk Swap
This is a swap agreement between a municipality and a financial intermediary, where the municipality pays a fixed rate of interest to the financial intermediary and receives a floating rate of interest in return. The floating rate received by the municipality is equal to the floating rate on the outstanding floating rate debt initially issued by the municipality to the public.
Zero Coupon Bond
With a Zero Coupon Bond, the holder of the bond gets a lump sum upon maturity instead of periodic payments of interest during the lifetime of the bond. When the bond is issued, it costs significantly less to purchase than what it will pay upon maturity.
Zero Coupon Inflation Swap
In a Zero Coupon Inflation Swap, an income stream that is tied to the rate of inflation is exchanged for an income stream with a fixed interest rate. Instead of actually exchanging payments periodically, the participants agree to settle the situation when the swap reaches maturity.
Zero Coupon Inflation Swaps are chiefly used to manage exposure to purchasing power changes.
Reverse Zero Coupon Inflation Swap: When the lump-sum payment is paid at the start of the contract period.
Zero Dividend Preference Shares
Preference shares that never receives any dividends. At maturity, a fixed and predetermined amount is paid to the shareholder.
The Zeta Model is a mathematical formula developed by NYU Professor Esward Altman in the 1960s. It is an attempt to calculate the chance of a public company going bankrupt within the next 2 years.
The model is specified as:
1.2A + 1.4B + 3.3C + 0.6D + 1.0E = the company’s Z-score
The company’s Z-score is the predictor of bankruptcy within the next 2 years.
A bank or financial institution that continues to operate despite having a negative net worth. Zombie banks are usually the recipients of government backings or bailouts intended to prevent them from dying.
A company that continues to operate while being insolvent or near bankruptcy.
The shares of a zombie share company are known as zombie stock or living deads.
In the context of options, zomma is a measurement of the change in gamma in relation to changes in volatility of the underlying asset.
Zomma and gamma are both greeks, i.e. quantities representing the sensitivity of the price of derivatives to a change in underlying parameters on which the value of the instrument depends. They are called greeks since most of them are denoted by Greek letters.
Zomma is considered a third-level greek. Options traders chiefly use zomma when monitoring the effectiveness of gamma-hedged investment portfolios.