Modeling Cash Flows

This chapter provides an overview of the Cash Flow Modeler and discusses how to:

Model cash flows for new instruments.
Model cash flows for user-defined instruments.
Generate delivered cash flows.

Understanding the Cash Flow Modeler

The Cash Flow Modeler enables you to interactively model cash flows for an instrument or product, graph and view the results online, and write the results to the database. You can explore assumptions affecting cash flows such as the interest rate environment, terms, and payment characteristics of the instrument and the effects of the Behavioral Model.

You can use the Cash Flow Modeler in one of three ways:

To retrieve one of the delivered instrument cash flows, temporarily change selected parameters (for example, start date, initial balance, and interest rate), run the cash flow, and view the statistical and graphical results online.
To modify a previously created user-defined instrument, override some of the parameters, model the cash flows, and view the results.
To create a new instrument or pool from scratch based on your own implementation environment, model the cash flows, and view results online.

You can save the results of the Cash Flow Modeler (for both user-defined and new instruments) to the Cash Flow Modeler table. For delivered cash flows, you can view the results from changes that you make to the parameters online, but you cannot save those results and override the delivered cash flows.

Modeling Cash Flows for New Instruments

Access the Cash Flow Modeler from the PeopleSoft Enterprise Funds Transfer Pricing application.

This section discusses how to:

Generate cash flows for new instruments.
Define detailed parameters.
View cash flows.
View financial measures.
View error messages.
Save modeling results.

Pages Used to Model Cash Flows for New Instruments

Page Name	Object Name	Navigation	Usage
Model New Instruments	FI_MODEL_NEW_INSTR	Financial Services Industries, Analysis and Processing, Cashflow Modeler, Model a New Instrument, Model New Instruments	Generate cash flows for instruments, products, or pools.
Detailed Parameters	FI_CF_DETAIL_PARAM	Click the Detailed Parameters link on the Model New Instruments page.	View, modify, and define detailed parameters.
Cashflows	FI_CF_R00	Financial Services Industries, Analysis and Processing, Cashflow Modeler, Model a New Instrument, Cashflows	View cash flow modeling results (statistics and charts).
Financial Measures	FI_CFCALC_R00	Financial Services Industries, Analysis and Processing, Cashflow Modeler, Model a New Instrument, Financial Measures	View financial measures resulting from cash flow modeling.
Financial Calculation Output	FI_CFE_R00	Click the Display Error Message link on the Cashflows page.	Displays financial calculation output when cash flow is generated online from the Cash Flow Modeler process. View error messages concerning missing data, and errors generated when running the cash flow process. The system automatically displays the Error Messages page if you attempt to run the Cash Flow Modeler with missing data or if the process fails. The system displays the set, message number, message text, and process instance for each processing error.
Notes	FI_CASHFLOW_NOTES	Financial Services Industries, Analysis and Processing, Cashflow Modeler, Model a New Instrument, Notes	Enter a description of the cash flow model.

Generating Cash Flows for New Instruments

Access the Model New Instruments page.

Run Cashflow

Click to run the cash flow process after defining the parameters.

Business, Model, Scenario

Business Unit	Select a predefined business unit from your business environment.
Scenario ID	Select a scenario ID from the predefined values. When you enter the scenario ID, the system displays default values for the Scenario Type, FIN Model, and Interest Rate fields. Note. On the Historic Business Rules page (Support Modules, Scenarios, Historic Business Rules) a model ID is associated with the specified scenario ID. Before you process cash flows, make sure that the Trace Settings field on the Model Definition page is set to a moderate value for that model ID. A Trace Settings field value of 8-Complete could compromise performance capability significantly while processing cash flows.
FIN Model	After you select a scenario ID, the system displays the financial model. See Setting Up Model Definitions.
Interest Rate	After you select a scenario ID, the system displays the Interest Rate type. The possible values areMarket, Deterministic, or Stochastic.

Create From:

Scratch Existing Instrument, Existing Product, and Existing Pool

Select Scratchif you are modeling a new instrument.

If you are not modeling a new instrument, select one of the other options to use a template as a starting point.

Product, Instrument, Pool

Instrument Type	Select Bond/Note, Cap/Floor, Deposit, LOC, Loan, or Swap Leg.
Instrument ID, Product ID, and Pool ID	Select an Instrument ID, Product ID, or Pool ID. The selection that you make depends on the Instrument Type selection.
Template Type	This field is available if you are using a loan template. Select 15FX Loan, 20FX Loan, 30FX Loan, 40FX Loan, or FL Loan.
Parameters Defined	The system selects the Parameters Defined check box to indicate that all the parameters required to run the cash flow are defined. Define the parameters on the Detailed Parameters page if this option is not selected.
Upgrade Cashflow Type	Select to save this cash flow as a user-defined cash flow. Otherwise, the system saves the cash flow as a new instrument cash flow. Note. You also need to click the Save button at the bottom of the page to save the cash flow results.
Detailed Parameters	Click to access the Detailed Parameters page. Enter or modify the instrument, product, or pool details.

Defining Detailed Parameters

Access the Detailed Parameters page.

You define the fields on the Detailed Parameters page by using the Product Portfolio Definition product, under the Product Setup and Behavioral Models pages. If you use an existing instrument, product, or pool template for your cash flow model, the system populates most of these fields, but you can modify many of the fields. If you are creating a new cash flow model, you need to provide much of the information on the Detailed Parameters page; however, the system automatically populates some of the fields, which you can modify as needed.

Depending on whether you are modeling cash flows for an instrument, product, or pool, the following are required fields:

Disc Rate Tbl (discount rate table)
Start Date
First Rep Date (first reprice date)
Reprice Freq (reprice frequency)
Init Balance (initial balance)
Installments
Amortizing
Interest Rate
Index ID

Viewing Cash Flows

The system displays four tabs depending on the instrument, product, or pool that you are modeling.

Cashflow Data Tab

Access the Cashflows page.

The cash flow results appear on the Cashflows page, and include balance, principal, and interest amounts. Click the Balance button to chart the balance amounts Click the Principal and Interest button to chart the principal and interest amounts.

See Defining Financial Calculation Rules.

Earning Output Tab

If the instrument, product, or pool that you are modeling uses a Forecast Scenario type, then the system displays the Earning Output page, which includes income, fees, and amounts associated with gains or losses.

Click the Balance button to view the charted balance amounts. Click the Principal and Interest button to view the charted principal and interest amounts.

Behavioral Output Tabs

If the instrument, product, or pool that you are modeling uses a Behavioral Model, then the system displays the deposit behavioral output page or the loan or line of credit behavioral output page.

Click Balance to chart the balance amounts. Click the Principal and Interest button to chart the principal and interest amounts.

See Setting Up Behavioral Models.

Viewing Financial Measures

Access the Financial Measures page.

After you run the Cash Flow Modeler, the system displays the resulting financial measurements for the modeled instrument, product, or pool.

See Defining Financial Calculation Rules.

Viewing Financial Calculation Output

Access the Financial Calculation Output page.

The system displays the Error Messages page if you attempt to run the Cash Flow Modeler with missing data or if the process fails. The system displays the set, message number, message text, and process instance for each processing error.

Saving Modeling Results

To save the modeling results, click the Save button on the Model New Instruments page. The system saves the Model New Instruments page data in the FI_CF_DEFN table, the Detailed Parameters page data in the FI_CF_INSTR_SEQ table, the cash flow data in the FI_CF_R00 table, and the Financial Measures page data in the FI_CFCALC_R00 table.

Modeling Cash Flows for User-Defined Instruments

After you have defined the cash flow model, you can run the CashFlow Modeler to view and save the results as needed.

This section discusses how to generate cash flows for user-defined instruments.

Pages Used to Model Cash Flows for User-Defined Instruments

Page Name	Object Name	Navigation	Usage
User Defined Cashflows	FI_USER_DEFN_CF	Financial Services Industries, Analysis and Processing, Cashflow Modeler, User Defined Cashflow	Generate cash flows for user-defined instruments, products, or pools.
Detailed Parameters	FI_CF_DETAIL_PARAM	Click the Detailed Parameters link on the User Defined Cashflows page.	View or modify parameters.
Cashflows	FI_CF_R00	Financial Services Industries, Analysis and Processing, Cashflow Modeler, User Defined Cashflow, Cashflows	View the cash flow modeling results (statistics and charts).
Financial Measures	FI_CFCALC_R00	Financial Services Industries, Analysis and Processing, Cashflow Modeler, User Defined Cashflow, Financial Measures	View the financial measures resulting from the cash flow modeling.
Error Messages	FI_CFE_R00	Click the Display Error Message link on the Cashflows page.	View error messages concerning missing data, and errors generated when running the cash flow process. The system automatically displays the Error Messages page if you attempt to run the CashFlow Modeler with missing data or if the process fails. The system displays the set, message number, message text, and process instance for each processing error.
Notes	FI_CASHFLOW_NOTES	Financial Services Industries, Analysis and Processing, Cashflow Modeler, User Defined Cashflow, Notes	Enter a description of the cash flow model.

Generating Cash Flows for User-Defined Instruments

Access the User Defined Cashflows page.

The business unit, scenario ID, model ID, setID, scenario type, interest rate, and product, instrument, or pool ID appear by default, depending on the cash flow ID that you selected.

Note. On the Historic Business Rules page (Support Modules, Scenarios, Historic Business Rules) a model ID is associated with the specified scenario ID. Before you process cash flows, make sure that the Trace Settings field on the Model Definition page is set to a moderate value for that model ID. A Trace Settings field value of 8-Complete could compromise performance capability significantly while processing cash flows.

To model cash flows for a user-defined instrument, product, or pool, enter the start date, end date, initial balance, and interest rate for the cash flow model. Click Detailed Parameters to access the Detailed Parameters page, on which you can enter or modify additional instrument, product, or pool details.

After you have defined the required parameters, click the Run Cashflow button to run the Cash Flow Modeler process. To save the modeling results, click the Save button on the User Defined Cashflows page or the Financial Measures page. The system saves the results.

Generating Delivered Cash Flows

You can quickly retrieve delivered instrument or product template data, alter a minimal set of parameters, and process cash flows. You can view the results of the Cash Flow Modeler online, but you cannot save for later retrieval any changes that you make.

This section discusses how to generate delivered cash flows.

Pages Used to Generate Delivered Cash Flows

Page Name	Object Name	Navigation	Usage
Delivered Cashflows	FI_DELIVERED_CF	Financial Services Industries, Analysis and Processing, Cashflow Modeler, Delivered Cashflows	Modify and run delivered cash flow models.
Detailed Parameters	FI_CF_DETAIL_PARAM	Click the Detailed Parameters link on the Delivered Cashflows page.	View or modify parameters.
Cashflows	FI_CF_R00	Financial Services Industries, Analysis and Processing, Cashflow Modeler, Delivered Cashflows, Cashflows	View cash flow modeling results (statistics and charts).
Financial Measures	FI_CFCALC_R00	Financial Services Industries, Analysis and Processing, Cashflow Modeler, Delivered Cashflows, Financial Measures	View the financial measures resulting from the cash flow modeling.
Error Messages	FI_CFE_R00	Click the Display Error Message link on the Cashflows page.	View error messages concerning missing data, and errors generated when running the cash flow process. The system automatically displays the Error Messages page if you attempt to run the Cash Flow Modeler with missing data or if the process fails. The system displays the set, message number, message text, and process instance for each processing error.
Notes	FI_CASHFLOW_NOTES	Financial Services Industries, Analysis and Processing, Cashflow Modeler, Delivered Cashflows, Notes	Enter a description of the cash flow model.

Generating Delivered Cash Flows

Access the Delivered Cashflows page.

The business unit, scenario ID, model ID, setID, scenario type, interest rate, and product, instrument, or pool ID appear by default, depending on the cash flow ID that you selected.

To modify and run a delivered cash flow model, enter the start date, end date, initial balance, and interest rate for the cash flow model. Click Detailed Parameters to access the Detailed Parameters page, on which you can enter or modify additional instrument, product, or pool details.

See Defining Detailed Parameters.

After you have defined the required parameters or modified the parameters as needed, click the Run Cashflow button to run the cash flow. You cannot save the results from a delivered cash flow model that you have modified.