Letter Z Vocabulary

Question 1

A portfolio constructed to have no systematic risk, or a beta of zero, with respect to the overall market or a particular benchmark.

Answer 1

Zero Beta Portfolio

Question 2

A situation in which nominal interest rates are at or near zero, limiting the central bank’s capacity to stimulate economic growth.

Answer 2

Zero Bound

Question 3

A transaction executed at a price lower than the preceding trade.

Answer 3

Zero Minus Tick

Question 4

A transaction executed at the same price as the preceding transaction but higher than the transaction before that.

Answer 4

Zero Plus Tick

Question 5

Refers to a security’s consecutive trading activity that remains equal in price to its preceding trade which was an uptick.

Answer 5

Zero Uptick

Question 6

A bond that does not pay periodic interest but is sold at a discount from its face value and is redeemed at its face value upon maturity.

Answer 6

Zero-Coupon Bond

Question 7

A financial institution that has an economic net worth less than zero but continues to operate because of implicit or explicit government support.

Answer 7

Zombie Bank

Question 8

Old debt, often outside the statute of limitations or already written off, that is purchased by collectors and pursued for collection.

Answer 8

Zombie Debt

Question 9

A statistical measurement that describes a value’s relationship to the mean of a group of values, commonly used in credit risk modeling.

Answer 9

Z-Score

Question 10

A specific portion or tranche of a mortgage-backed security that is last to receive any payments, serving as a kind of buffer for other tranches.

Answer 10

Z-Tranche