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.

ZeroVolatility Spread  Zspread
The constant spread that will make the price of a security equal ... 
Nominal Yield Spread
The spread, expressed in percent or basis points, that when added ... 
Spot Rate Treasury Curve
A yield curve constructed using Treasury spot rates rather than ... 
Static Gap
A measure of exposure or sensitivity to interest rates. Static ... 
Credit Spread Option
A financial derivative contract that transfers credit risk from ... 
Yield Spread
The difference between yields on differing debt instruments, ...

Bonds & Fixed Income
How Bond Market Pricing Works
Yield is the commonest measure used to determine a bondâ€™s expected return. Yieldtomaturity and spot rates are the two primary yield measures. 
Term
Understanding Yield Spread
Yield spread is the difference in yields between debt instruments. 
Bonds & Fixed Income
Understanding Interest Rates, Inflation And Bonds
Get to know the relationships that determine a bond's price and its payout. 
Bonds & Fixed Income
Corporate Bonds: An Introduction To Credit Risk
Corporate bonds offer higher yields, but it's important to evaluate the extra risk involved before you buy. 
Investing Basics
Explaining Credit Spread
A credit spread has two different meanings, one referring to bonds, the other to options. 
Term
What's the OptionAdjusted Spread?
The optionadjusted spread, or OAS, measures a fixedincome security rateâ€™s spread and the riskfree rate of return thatâ€™s adjusted to account for an embedded option. 
Bonds & Fixed Income
Understanding Bond Prices and Yields
Understanding this relationship can help an investor in any market. 
Options & Futures
Trading Calendar Spreads In Grain Markets
Futures investors flock to spreads because they hold true to fundamental market factors. 
Active Trading
S&P 500 Options On Futures: Profiting From TimeValue Decay
Writing bull put credit spreads are not only limited in risk, but can profit from a wider range of market directions. 
Bonds & Fixed Income
Interest Rates, Inflation and the Bond Market
Interest rates, bond prices and inflation all have an impact on one another.

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