ZERO COUPON INFLATION SWAP

Zero Coupon Inflation Swap is a type of inflation derivative that allows an investor to decrease or increase his/her exposure to the risk of a decline in the purchasing power of money. An income stream tied to the inflation rate is exchanged for an income stream that has a fixed interest rate. Nevertheless, these two income streams do not actually exchange payments on a periodic basis. Instead, they are both paid in a single lump-sum payment upon reaching maturity and determining the inflation level.