Business and Personal Finance Dictionary

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• JUMP Z
  
  A last-pay "companion" (sort of residual) tranche of a REMIC (q.v.) that "jumps" into first-pay status if interest rates fall or prepayments are rapid. The desired effect of the jump provision is to promote positive convexity (like a bond), rather than negative convexity (like a mortgage) in another tranche. (Source: "Derivative Mortgage Securities Glossary," Dean Witter, Mortgage Backed Securities Department, Derivative Products Group, January 1995.) Fixed-income, equity-linked debt securities of corporation A, that participate in the change in price of the "linked" common stock of corporation B. Four main examples, listed on the American Stock Exchange, include Salomon Brothers' ELKS (sm) (q.v.), Bear Stearns' CHIPS (sm) (q.v.), Lehman Brother's YEELDS (sm) (q.v.), and Morgan Stanley's PERQ's (sm) (q.v.). These four pay quarterly interest at a fixed percentage rate.
  
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