Glossary of Financial Terms starting with Alphabet ‘Z’

Glossary of ‘Financial Terms’ starting with Alphabet ‘Z’, i.e. ‘Meaning’ or ‘Definition’ of Common and Unusual terms relating to Accounting, Auditing, Company Law, GST, Income Tax, Investments, etc., along with the ‘Context’ in which they are used.

Zero Coupon Bond (ZCB)

A bond that pays no/ zero interest while the investor holds it. It is sold originally at a substantial discount as against the maturity value/ face value. In other words, investor buys the bond at a discounted value and finally gets the face value on maturity. The difference between the initially paid amount and the finally collected amount, represents the interest earned over the holding period/ year(s). Also refer Zero Coupon Bonds: Meaning & Tax Treatment.

Zero coupon yield curve

A yield curve of zero coupon bonds. Market practice is often to derive this curve theoretically from the par yield curve. Frequently used to derive discount factors. Also known as spot yield curve.

Leave a Reply