32.3.3 Define the Breakage Charge Economic Loss Method

Defining the Economic Loss Breakage Charge assumption requires the following additional steps:

Figure 32-9 Adjustment Rule Definition Mode - Adjustment Rule Details

1. Select the Interest Rate Code and Rate Spread to use for discounting the remaining term cash flows.
2. Select the minimum charge amount. Default to -99999 if you want to calculate both gains and losses.
3. Select the TP Cash Flow Interest Type. This interest rate will be used to generate interest cash flows.
4. Select the option to Exclude Accrued Interest if applicable.
5. Select the Interest Only option to discount only the Interest cash flows.
6. Select a Holiday Calendar if you want to adjust cash flows for Holidays and Weekends.

   The default selection for Holiday Calendar is None. If this option is selected, then Holiday Calendar adjustments will not be applied to cash flow dates. If you wish to apply Holiday Calendar Adjustments, then select the appropriate Calendar.

7. Select the appropriate Rolling Convention. When Holiday Calendar has been selected in the preceding field, this drop-down list becomes active and contains 4 values:
   • Following Business Day
   • Modified following Business Day
   • Previous Business Day
   • Modified previous Business Day
8. Select the appropriate Interest Calculation Logic from the following:
   • Shift Dates Only
   • Recalculate Payment
9. Select Apply.