Definition of Zero-sum game

Zero-sum game

A type of game wherein one player can gain only at the expense of another player.

Consumer credit

Credit granted by a firm to consumers for the purchase of goods or services. Also called
retail credit.

Consumer Price Index (CPI)

The CPI, as it is called, measures the prices of consumer goods and services and is a
measure of the pace of U.S. inflation. The U.S.Department of Labor publishes the CPI very month.

Economic assumptions

Economic environment in which the firm expects to reside over the life of the
financial plan.

Fair game

An investment prospect that has a zero risk premium.

Homogenous expectations assumption

An assumption of Markowitz portfolio construction that investors
have the same expectations with respect to the inputs that are used to derive efficient portfolios: asset returns,
variances, and covariances.

Sum-of-the-years'-digits depreciation

Method of accelerated depreciation.

Zero coupon bond

Such a debt security pays an investor no interest. It is sold at a discount to its face price
and matures in one year or longer.

Zero prepayment

assumption The assumption of payment of scheduled principal and interest with no payments.

Zero uptick

Related: tick-test rules.

Zero-balance account (ZBA)

A checking account in which zero balance is maintained by transfers of funds
from a master account in an amount only large enough to cover checks presented.

Zero-beta portfolio

A portfolio constructed to represent the risk-free asset, that is, having a beta of zero.

Zero-coupon bond

A bond in which no periodic coupon is paid over the life of the contract. Instead, both the
principal and the interest are paid at the maturity date.

Zero-investment portfolio

A portfolio of zero net value established by buying and shorting component
securities, usually in the context of an arbitrage strategy.

Zero-one integer programming

An analytical method that can be used to determine the solution to a capital
rationing problem.

SUM-OF-THE-YEARS’ DIGITS

An accelerated depreciation method that makes the sum of the digits in an asset’s expected
life the denominator for a series of yearly depreciation fractions.
The numerators of these fractions are the asset’s years of life in reverse order.
An increasingly smaller depreciation fraction is applied to the asset’s (cost–salvage) value each year.

Zero-based budgeting

A method of budgeting that ignores historical budgetary allocations and identifies the costs that are necessary to implement agreed strategies.

Zero-coupon Bond

A security that makes no interest payments; it is sold at a discount
at issue and then repaid at face value at maturity

reinvestment assumption

an assumption made about the rates of return that will be earned by intermediate cash flows from a capital project; NPV and PI assume reinvestment at the discount rate; IRR assumes reinvestment at the IRR

zero-base budgeting

a comprehensive budgeting process
that systematically considers the priorities and alternatives
for current and proposed activities in relation to organization
objectives; it requires the rejustification of ongoing activities

Zero curve, zero-coupon yield curve

A yield curve for zero-coupon bonds;
zero rates versus maturity dates. Since the maturity and duration (Macaulay
duration) are identical for zeros, the zero curve is a pure depiction of supply/
demand conditions for loanable funds across a continuum of durations and
maturities. Also known as spot curve or spot yield curve.

Zero-coupon bond, or Zero

A bond that, instead of carrying a coupon, is sold
at a discount from its face value, pays no interest during its life, and pays the
principal only at maturity.

zero-balance account

Regional bank account to which just enough funds are transferred daily to pay each day’s bills.

Average Propensity to Consume

Ratio of consumption to disposable income. See also marginal propensity to consume.

Capital Consumption Allowance

See depreciation.

Consumer Price Index (CPI)

An index calculated by tracking the cost of a typical bundle of consumer goods and services over time. It is commonly used to measure inflation.

Consumption Function

The relationship between consumption demand and disposable income. More generally, it refers to the relationship between consumption demand and all factors that affect this demand.

Marginal Propensity to Consume

Fraction of an increase in disposable income that is spent on consumption.

Zero-Coupon Bond

See discount bond.

Consumer Credit Protection Act

A federal Act specifying the proportion of
total pay that may be garnished.

Financial Numbers Game

The use of creative accounting practices to alter a financial statement
reader's impression of a firm's business performance.

Summarized bill of materials

A bill of materials format showing the grand total
usage requirement for each component of a finished product.

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