Financial Dictionary


Zero Coupon Inflation Swap

Exchange of cash flows that allows investors to reduce or increase their exposure to the risk of a decline in the purchasing power of money. In a zero coupon inflation swap, which is a basic type of inflation derivative, an income stream that is tied to the rate of inflation is exchanged for an income stream with a fixed interest rate. However, instead of actually exchanging payments periodically, both income streams are paid as one lump-sum payment when the swap reaches maturity.

Equity Scholar is a market-leading financial education service for traders and investors alike. Built to be the best, Equity Scholar offers a full range of free educational products and services that provide lifelong learning and support to those seeking improvement in their trading and investing performance.