2.6 Rate Conversion Process

1. Final rate is always be per annum rate.
2. The final annual rate is resolved based on the following

   Parameter	Values
   Rate Basis	Not Applicable/Per Annum/Per Month/Quote basis

3. Changes are done in arriving at the resolved rate based on new parameters during the save of OL account and during VAMI/Rate revision cascade processes as well.
4. 4. After auto rate revision, existing rate basis gets re-defaulted by the system.

Linear Rate with Rate Basis as Per Month/Per Annum/Not Applicable

1. If Rate Method is Rate/Rate code and the Rate Basis is Per Annum/Not Applicable, then rate calculation is always in per annum.
2. If Rate Method is maintained as Rate/Rate code at OL product level and rate basis is Per Month, the system calculates the per annum rate as Rate per Month *12 This rate is displayed as Final rate on save

Linear Rate with Rate Basis as Quota Basis

If Rate Method is Rate/Rate code and Rate Basis is Quote Basis, the final rate is based on the Quote Basis at float rate maintenance level.

Float rate per annum is derived as below depending on the quote basis:

Quote Basis	Resolved Rate
Exponential-252	{(((1+Float rate)^(1/252)) –1 )}*YEAR
Exponential-365	{(((1+Float rate)^(1/365)) –1 )}*YEAR
Linear360	Float rate/360*YEAR

Days in year is the Interest Basis denominator used for the Main Interest component.

Exponential Rate with Rate Basis as Per month/Per annum/Not Applicable

1. If Rate Method type is maintained as Exponential Rate, the calculations for rate resolution is based on exponential method.
2. If Rate Method type is maintained as Exponential Rate and the Rate Basis is Per Month, then the system calculates the per annum rate as ((1+Rate per Month)^12)-1

Exponential Rate with rate basis as quote basis

If Rate Method is Exponential Rate and Rate Basis is Quote Basis, the final rate is resolved as Float Rate Per Annum.

Depending on the Quote Basis, the Floating Rate Per Annum is calculated as below

Quote Basis	Float Rate per Annum
Exponential-252 {	{1+((1+Float rate)^(1/252) –1 )}^YEAR-1
Exponential-365	{1+((1+Float rate)^(1/365) –1 )}^YEAR-1
Linear 360	Linear 360 {1+(Float rate/360) }^YEAR-1

Year is the Interest Basis denominator used for the Main Interest component.

Note:

If any spread is fetched as maintained in OL module it is applied to the final resolved rate only.