# Z-Spread

*Markets & Instruments — Finicade finance glossary*

The Z-spread is the constant amount added to every point on the risk-free curve that makes a bond's discounted cash flows equal its market price. It improves on a simple yield spread by respecting the shape of the curve rather than comparing against a single maturity. For bonds with embedded options it's still incomplete, which is where option-adjusted spread takes over by stripping out the option's value first.

**Also known as:** zero-volatility spread, z spread

**Related terms:** [Credit Spread](https://finicade.com/glossary/credit-spread), [Option-Adjusted Spread (OAS)](https://finicade.com/glossary/option-adjusted-spread), [Discount Factor](https://finicade.com/glossary/discount-factor), [Yield Curve](https://finicade.com/glossary/yield-curve), [Corporate Bond](https://finicade.com/glossary/corporate-bond)

Source: https://finicade.com/glossary/z-spread