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Financial Glossary

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Z bond
Also known as an accrual bond or accretion bond; a bond on which interest accretes interest but is not paid currently to the i nvestor but rather is accrued, with accrual added to the principal balance of the Z and becoming payable upon satisfaction of all prior bond classes.
Zero-balance account (ZBA)
A checking account in which zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover checks presented.
Zero-beta portfolio
A portfolio constructed to represent the risk-free asset, that is, having a beta of zero.
Zero-coupon bond
A bond in which no periodic coupon is paid over the life of the contract. Instead, both the principal and the interest are paid at the maturity date.
Zero-investment portfolio
A portfolio of zero net value established by buying and shorting component securities, usually in the context of an arbitrage strategy.
Zero-one integer programming
An analytical method that can be used to determine the solution to a capital rationing problem.
Zero prepayment assumption
The assumption of payment of scheduled principal and interest with no payments.
Zero-sum game
A type of game wherein one player can gain only at the expense of another player.
Zero uptick
Related: tick-test rules.
Z score
Statistical measure that quantifies the distance (measured in standard deviations) a data point is from the mean of a data set. Separately, z score is the output from a credit-strength test that gauges the likelihood of bankruptcy.

Glossary created by Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University
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