Three-letter currency code for the South African Rand
Zero-Cost Option
MARKET: Options
Any option strategy that involves the simultaneous purchase and sale of one or more options that result in a net premium payable or receivable of zero.
Zero-Coupon Bond
MARKET: Fixed Income
An interest rate instrument that sells at or is issued at a discount to its face value and does not pay interest. This bond repays the face (nominal/par) value on its redemption date.
Zero-Coupon Swap
MARKET: Derivatives
This is an interest rate swap where one party makes a single bullet payment at the maturity of the swap, while receiving regular cash flows from its counterparty throughout the life of the swap.
Zero Curve
A zero curve is an interest rate curve (i.e. a set of dates and rates) that gives the interest rate to be used to value a cash flow at each particular date. This is convenient because if you have an arbitrary cash flow profile you can simply value each cashflow using the rate applicable to its date. (In contrast a par curve can only be used to value a bullet profile.)
The swap zero curve is a curve fitted to the rates in the swap market. The bond zero curve is a curve fitted to rates in the bond market. These curves do differ because of supply and demand effects between the two markets. Generally IBD would use the swap curve for pricing.
The zero curve is regarded as a risk-free curve. In pricing a spread would be added to the curve to cover risks such as liquidity and credit risks
Zero Sum Game
MARKET: General
A situation in which one participant's gains result only from another participant's equivalent losses. The net change in total wealth among participants is zero; the wealth is just shifted from one to another.
