What is Z-Bond?

The final bond to mature is frequently a Z-bond, also known as an accrual bond. After all other bond classes, it receives payment, which is the accumulation of interest added to the principal. Investors should be aware that Z-bonds are considered speculative investments and might be hazardous. Mortgage-backed security (MBS) is referred to as a Z-bond (MBS). Mortgage-backed security (MBS) is made up of a group of underlying securities, which are often house mortgages. Only the lender’s belief in the borrower’s capacity to make mortgage payments secures an MBS.