Z-Bond

Dictionary Says

Definition of 'Z-Bond'

The final tranche in a series of mortgage-backed securities that is the last one to receive payment. Used in some collateralized mortgage obligations (CMO), Z-bonds pay no coupon payments while principal is being paid on earlier bonds. Interest that would have been paid on Z-bonds is used instead to pay down principal more rapidly on the earlier series of bonds.
Investopedia Says

Investopedia explains 'Z-Bond'

Interest payable on a Z-bond is added to the principal balance and becomes payable once claims on all prior bond classes have been satisfied. A Z-bond is similar to a zero-coupon bond, since it accrues interest rather than paying it out. Therefore, the final tranche is considered the most risky for the CMO class structures.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Collateralized Mortgage Obligation - CMO

    A type of ...
  2. Collateralized Debt Obligation - CDO

    An ...
  3. Mortgage-Backed Security (MBS)

    A type of ...
  4. Pass-Through Rate

    The rate on a ...
  5. Z-Tranche

    A special type ...
  6. Maintenance Bond

    A type of surety ...
  7. Agency Bond

    A bond issued by ...
  8. Convertible Arbitrage

    An investing ...
  9. Liquidation

    1. When a ...
  10. Canada Savings Bond - CSB

    A financial ...

Articles Of Interest

  1. What is the difference between a CMO and a CBO?

  2. These Financial Products Are Too Complex For The Average Joe

    Structured financial products are so elaborate that investors are unable to assess costs and risk.
  3. Collateralized Debt Obligations: From Boon To Burden

    CDOs were to be Wall Street's boon - instead they went bust. Find out what went wrong.
  4. 20 Investments: Mortgage-Backed Securities

    To take advantage of all your investing options, you need to know what your choices are. Here we tell you about the diverse features and advantages of 20 different financial instruments.
  5. Profit From Mortgage Debt With MBS

    Mortgage-backed securities can offer monthly income, a fixed interest rate and even government backing.
  6. This Is Your Brain On Stocks

    Find out how the human mind can hurt investors' portfolios.
  7. Should You Invest Your Entire Portfolio In Stocks?

    It is true that stocks outperform bonds and cash in the long run, but that statistic doesn't tell the whole story.
  8. 5 Tips For Diversifying Your Portfolio

    A diversified portfolio will protect you in a tough market. Get some solid tips here!
  9. 5 Popular Portfolio Types

    Learning how to build these portfolios will increase your investing confidence and give you financial control.
  10. How To Invest When You're Deep In Debt

    Debt is one of the biggest obstacles that prevents people from investing - but it shouldn't be.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center