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#bonds #finance #yield-to-maturity #z-spread
As the Z-Spread is not dependent upon only one point on the Yield Curve and takes account of all of the relevant term-structure, the distortions of Yield-to-Maturity spreads outlined above are eliminated. It is then a measure of Credit Spread without the distortions of YTM.
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Z-spread - Wikipedia, the free encyclopedia
y equal the bond's price. If they do, then you have found the Z-spread, if not, you have to go back to the drawing board and use a new spread until the present value of those cash flows equals the bond's price. The Advantage of Z-Spread[edit] <span>As the Z-Spread is not dependent upon only one point on the Yield Curve and takes account of all of the relevant term-structure, the distortions of Yield-to-Maturity spreads outlined above are eliminated. It is then a measure of Credit Spread without the distortions of YTM. It is widely used in the CDS and other markets by non bond traders who want a fair reading of Credit Spread undistorted by the complexities of individual bonds. Benchmark for CDS Basis[e


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