1. Asset Liability Management User Guide
  2. Discount Methods
  3. Defining Discount Method Rules

26.2 Defining Discount Method Rules

The definition of a Discount Methods rule is part of the Create or Edit Discount Methods rule process. When you click Save in the Create Discount Methods rule process, the rule is saved and the Discount Methods rule summary page is displayed. However, Discount Method assumptions have not yet been defined for any of your products at this point. Typically, you would start defining your Discount Method assumptions for product-currency combinations before clicking Save.

Defining Discount Methods Using Node Level Assumptions

Node Level Assumptions allow you to define assumptions at any level of the Product dimension Hierar­chy. The Product dimension supports a hierarchical representation of your chart of accounts, so you can take advantage of the parent-child relationships defined for the various nodes of your product hierarchies while defining rules. Children of parent nodes on a hierarchy automatically inherit the assumptions defined for the parent nodes. However, assumptions directly defined for a child take pre­cedence over those at the parent level.

Prerequisites

Performing basic steps for creating or editing a Discount Methods rule

Procedure

From the Assumption Browser screen, select the product(s) and the currency for which you want to define a discount method(s) and select the “Add New” button to launch the Discount Method Details screen.

Note:

Using the default currency to setup assumptions can save data input time. At run time, the calculation engine uses assumptions explicitly defined for a product currency combination. If assumptions are not defined for a currency, the engine uses the assumptions defined for the product and the default currency. If the assumptions are the same across some or all currencies for a specific product, you can input assumptions for the default currency. Be careful using this option on screens where an Interest Rate Code is a required input. In most cases, you will want to use a currency specific discount curve for discounting instruments within each specific base currency. The Default Currency option, if used will apply a selected Interest Rate Code across all currencies.