DEFINITION of 'Static Spread'
The constant yield spread which when added to the point on the spot rate Treasury curve where a cash flow from a bond is received will make the price of the bond equal to the present value of its cash flows. In other words, each cash flow is discounted at the appropriate Treasury spot rate plus the static spread. The static spread is also known as a zerovolatility or Zspread.
BREAKING DOWN 'Static Spread'
Static or Zspread calculations are frequently used in mortgagebacked securities and other bonds with embedded options valuation. An option adjusted spread calculation, which is frequently used to value bonds with embedded options, is essentially a static spread calculation based on multiple interest rate paths and the prepayment rates associated with each interest rate path.

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What is Zspread and option adjusted credit spread?
Read about the uses of and connection between the zerovolatility spread (Zspread) and the optionadjusted credit spread ... Read Answer >> 
What are the most popular and useful measures of credit spread?
Learn about the different types of credit spread measures that measure risk, including the zerovolatility spread and the ... Read Answer >> 
What is the difference between an optionadjusted spread and a Zspread in reference ...
Learn about the difference between the Zspread and optionadjusted spread valuations of future cash flows for bonds, and ... Read Answer >> 
How do I set a strike price in an options spread?
Find out more about option spread strategies, and how to set the strike prices for bull call spreads and bull put spreads ... Read Answer >> 
What causes a bond's price to rise?
Learn about factors that influence the price of a bond, such as interest rate changes, credit rating, yield and overall market ... Read Answer >> 
What's the difference between a credit spread and a debt spread?
Learn about debit and credit option spread strategies, how these strategies are used, and the differences between debit spreads ... Read Answer >>