# Zero Rate

*Quant & Pricing — Finicade finance glossary*

A zero rate is the yield on a single cash flow at one maturity, with no coupons in between — the pure price of time for that date. Zero rates are the building blocks of valuation because every instrument is a bundle of dated cash flows, each discounted at its own zero rate. A coupon bond's yield to maturity is a messy average of them, which is why curves are built in zero space rather than yield space.

**Also known as:** spot rate, zero coupon rate, zero curve

**Related terms:** [Curve Bootstrapping](https://finicade.com/glossary/curve-bootstrapping), [Discount Factor](https://finicade.com/glossary/discount-factor), [Yield Curve](https://finicade.com/glossary/yield-curve), [Zero-Coupon Bond](https://finicade.com/glossary/zero-coupon-bond), [Forward Rate](https://finicade.com/glossary/forward-rate)

**Taught in:** Hull Street — Interest Rates, Essentials

Source: https://finicade.com/glossary/zero-rate