A zero-coupon inflation swap (ZCIS), also called a zero-coupon inflation-indexed swap (ZCIIS), is a standard derivative product whose payoff depends on the inflation rate realized over a given period of time. The underlying asset is a single consumer price index (CPI).
It is zero-coupon because there is only one cash flow at the maturity of the swap, without any intermediate coupon. It is called a swap because at maturity, one counterparty pays a fixed amount to the other in exchange for a floating amount (in this case linked to inflation). The final cash flow will therefore consist of the difference between the fixed amount and the value of the floating amount at expiry of the swap.
Detailed flows
[edit]- At time = M years
- Party B pays Party A the fixed amount
- Party A pays Party B the floating amount
![{\displaystyle N[(1+K)^{M}-1]}](https://wikimedia.org/api/rest_v1/media/math/render/svg/3d804720630e04f379b7cac5e7d89a33aec85c0a)
![{\displaystyle N{\Bigg [}{\frac {{\mathcal {I}}(T_{M})}{{\mathcal {I}}(T_{0})}}-1{\Bigg ]}}](https://wikimedia.org/api/rest_v1/media/math/render/svg/3eb3e9be3d395fff58e6493b39a4ca00bb06ff00)
where:
- is the contract fixed rate
- the contract nominal value
- the number of years
- is the start date
- is the maturity date (end of the swap)
- is the inflation consumer price index at start date (time )
- is the inflation consumer price index at maturity date (time )
Well, that’s interesting to know that Psilotum nudum are known as whisk ferns. Psilotum nudum is the commoner species of the two. While the P. flaccidum is a rare species and is found in the tropical islands. Both the species are usually epiphytic in habit and grow upon tree ferns. These species may also be terrestrial and grow in humus or in the crevices of the rocks.
View the detailed Guide of Psilotum nudum: Detailed Study Of Psilotum Nudum (Whisk Fern), Classification, Anatomy, Reproduction