Zero Coupon Inflation Swap

A Zero Coupon Inflation Swap is a financial contract used to manage inflation risk. It allows parties to exchange the difference between the realized inflation rate and a fixed rate, without any upfront payments. In a Zero Coupon Inflation Swap, there are two main components: the inflation index and the fixed rate. The inflation index measures changes in the overall price level over time, reflecting inflation. The fixed rate is agreed upon by the parties involved in the swap.