bootstrapping

For financial risk mangers, bootstrapping means

(1) the procedure where coupon bonds are used to generate the set of zero-coupon bond prices, or

(2) the use of historical returns to create an empirical probability distribution for returns.

Bootstrapping is an iterative calculation technique, often used in the construction of specialized time series. For example, the calculation of forward rates from traditional yield curves uses an iterative process to extract the implied rate for each forward period. The term is used in other ways in other contexts. American Banker Glossary

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Creating a theoretical spot rate curve using one yield projection as the basis for the yield of the next maturity. Bootstrapping follows the work of Efron. It involves a Monte Carlo approach. Bloomberg Financial Dictionary

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bootstrapping boot‧strap‧ping [ˈbuːtˌstræpɪŋ] noun [uncountable]

1. the process of setting up a business, using very little money and a lot of hard work:

• He has some great advice for people bootstrapping their own business.

2. COMPUTING the process of using a simple program in order to make a much more complicated system (such as an operating system) start working

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bootstrapping UK US /ˈbuːtˌstræpɪŋ/ noun [U]

► FINANCE the process of starting and developing a business by using a lot of effort and no investment by outside owners: »

His success follows the central themes: bootstrapping, ambition, and vision.