Financial Definitions Starting with "Z"

Z is an extension to a ticker symbol. It denotes that the security is either a special class of preferred stock, a stub security, represents a limited partnership interest or is a special class of war...

A Z-bond is a bond representing the last tranche of a bond that relies on payments from underlying securities. To understand how Z-bonds work, it's important to understand how they're created...

The Z-score is a financial statistic that measures the probability of bankruptcy.  The Z-score is used to predict the likelihood that a company will go bankrupt. A company's Z-score is calcu...

Z-shares are shares of mutual funds for the employees of those mutual funds. For example, let's say John Doe works in the human resources department of the XYZ Fund Co. As part of his compensatio...

A Z-tranche is the last tranche of a bond that relies on payments from underlying securities. To understand how Z-tranches work, it's important to understand how they're created. Let's as...

A zero-balance account, sometimes called a "ZBA," is a business-oriented bank account that usually has a balance of $0. Let's say restaurant company XYZ keeps its cash in a checking account. Eve...

Zero based budgeting (ZBB) is a budgeting method that involves starting with $0 and adding only enough money in the budget to cover expected costs. There are many ways to create compan...

A zero-beta portfolio is a portfolio built with zero systematic risk. The investments comprised in a zero-beta portfolio are chosen in such a way that the portfolio's value does not fluctua...

A zero capital gains rate is a 0% tax on gains from the sale of assets and property sold in an enterprise zone. For example, downtown ABCTown has decayed over the last 10 years. There are many vacant...

A zero cost collar is a short-term option trading strategy that offsets the volatility risk by purchasing a cap and a floor for the price of a derivative.A zero cost collar strategy would combine the ...

A zero coupon bond is a bond that makes no periodic interest payments and is sold at a deep discount from face value. The buyer of the bond receives a return by the gradual appreciation of the sec...

A zero-layoff policy is a company policy that prohibits laying off employees. Let's assume Company XYZ is an organic grocery chain that has a zero layoff policy. The policy states that Company XY...

Also called a zero downtick, a zero minus tick is a trade that occurs at the same price as the trade preceding it but lower than the last trade at a different price. A zero minus tick is the opposite ...

Also called a zero uptick, a zero plus tick is a trade that occurs at the same price as the trade preceding it but higher than the last trade at a different price. A zero plus tick is the opposite of ...

Zero-bound is a scenario in which the Federal Reserve lowers interest rates to zero or near zero. Traders sometimes also use the term to describe stocks that seem to be quickly losing value. The Fede...

A zero-lot-line house is a house whose structure goes right up the edge of the property line. Let's say John Doe buys a tiny tenth-of-an-acre lot and decides to build a house on it. The lot is 55...

Zero-rated goods are goods that aren't subject to value-added (VAT) tax. A value added tax (VAT) is a consumption tax added to a product's sales price. It represents a tax on the "value added" to the...

In finance, a zero-sum game refers to trades or investments in which one investor gains when another investor loses. Futures and options trading is generally a zero-sum game; that is, if somebody mak...

The ZEW Economic Sentiment is a monthly survey of economic sentiment in Germany. (The acronym stands for Zentrum für Europäische Wirtschaftsforschung GmbH, or Centre for European Economic Research.)...

A zombie bank is a bank with liabilities that exceed its assets (in other words, it has a net worth of zero). They do not die (hence the nickname) because they receive government support or bailouts. ...

A zombie company is a firm that continues to operate even though its liabilities exceed its assets (in other words, it has a net worth of zero). Let's say Bank XYZ has $1 billion in assets ...

Zombie debt is debt that won't die.   Let's say John Doe ran up a $10,000 credit card bill in his 20s. He works out an agreement with the credit card company, pays $2,000, and is told...

Zoning is a method of determining how people can use land and buildings within a certain area. Zoning typically delineates areas within a town acceptable for residential construction, comme...

A zoning ordinance is a rule regarding how people can use land and buildings within a certain area. Zoning ordinances typically delineate acceptable areas within a town for residential construction, ...