what the zero volatility spread z spread can tell you
a z spread calculation is different than a nominal spread calculation a nominal spread calculation uses one point on the treasury yield curve not the spot rate treasury yield curve to determine the spread at a single point that will equal the present value of the security s cash flows to its price the zero volatility spread z spread helps analysts discover if there is a discrepancy in a bond s price because the z spread measures the spread that an investor will receive over the entirety of the treasury yield curve it gives analysts a more realistic valuation of a security instead of a single point metric such as a bond s maturity date 