Z-class
A REMIC class that pays no cash flow to the investor until certain other classes are paid off or some other specified event occurs. See Z tranche.
Often the last tranche in a REMIC, the Z-tranche receives no cash payments until the previous tranches are retired. While the other tranches are outstanding, the Z-tranche receives credit for periodic interest payments that increase its face value but are not paid out. When the other tranches are retired, the Z-tranche begins to receive cash payments that include both principal and continuing interest.
Zero-coupon security
A debt security that is issued at a deep discount and pays no annual interest. The interest is accrued and compounded semiannually at the original interest rate until the maturity date, and a payment of the full face value of the bond is then made to the holder. The security's yield is based on the difference between the original-issue-discount price and the par payment at maturity.