26.4 Defining a Discount Methods Rule Using Spot IRC: An Example

Define a Discount Methods rule for Total Loans using the spot IRC method.

1. From the Assumption Browser, select Currency (US Dollar) and Total Loans.
2. Select Add New to enter the Assumption Details page.
3. From the Discount Method list, select Spot IRC.
4. From Interest Rate Code list, select an appropriate Interest Rate Code.
5. The list of Interest Rate Codes depends on the selected currency. If the selected currency is the default currency, all Interest Rate Codes appear. For other currency selections, the list of interest rate codes includes only interest rate codes whose reference currency is the same as the selected currency.
6. Input a Rate Spread, type 1.0000.
7. A spread of 1% returns a discount rate of 1.00% above the reference interest rate. Type a negative number for a spread below the reference interest rate.
8. From Cash Flow Interest Type, select Net Rate.
9. Under Cash Flow Definition Details, use the default – Principal & Interest selection.
10. 8. Select Apply to commit the assumption and return to the Assumption Browser page.

    Note:

    You can select more than one product at a time from the Assumption Browser page. After applying assumptions and returning to the Assumption Browser, that all of the children listed below the parent member have “inherited” the Spot IRC assumption.

11. When Discount Method assumptions are defined for all required product / currency combinations, select SAVE from the Assumption Browser page.