Z score

Statistical measure that quantifies the distance (measured in standard deviations) a data point is from the mean of a data set. Separately, Z score is the output from a credit-strength test that gauges the likelihood of bankruptcy.

Zero-balance account (ZBA)

A checking account in which zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover checks presented.

Zero-base budgeting (ZBB)

Budgeting method that disregards the previous year’s budget in setting a new budget, since circumstances may have changed. Each and every expense must be justified in this system.

Zero-coupon bond

A bond in which no periodic coupon is paid over the life of the contract. Instead, both the principal and the interest are paid at the maturity date.

Zero-coupon convertible security

A zero-coupon bond convertible into the common stock of the issuing company after the stock reaches a certain price, using a put option inherent in the security. Also refers to zero-coupon bonds, which are convertible into an interest bearing bond at a certain time before maturity.

Zero-investment portfolio

A portfolio of zero net value established by buying and shorting component securities, usually in the context of an arbitrage strategy.