18.2 Defining Product Characteristic Rules

The definition of a Product Characteristics Rule is part of the Create or Edit Product Characteristics Rule process. When you click Save in the Create Product Characteristics Rule process, the Rule is saved, and the Product Characteristics Rule summary page is displayed. However, Product Characteristic assumptions have not yet been defined in the products at this point. Start defining the Product Characteristic assumptions for product or currency combinations before clicking Save.

Defining Product Characteristics 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 the chart of accounts to take advantage of the parent-child relationships defined for the various nodes of the product hierarchies when defining Rules. Children of parent nodes on a hierarchy automatically inherit the assumptions defined for the parent nodes. However, assumptions explicitly defined for a child take precedence over those at the parent level.

Prerequisites

Performing basic steps for creating or editing a Product Characteristics Rule.

To define a Product Characteristic Rule, follow these steps:

1. From the Assumption Browser window, select the product (or products) and the currency to define the Product Characteristics. Click Add + icon to launch the Product Characteristic Details window.
2. Select the Currency.

   Note:

   To define assumptions for all currencies with the selected product, select Default Currency.

3. From the Assumption Browser, select the Product or Products.
4. Click the Add Assumption.

   Enter a value for mandatory fields. Mandatory input fields are marked with a red asterisk.

   Else, select one of the seeded Product Profile templates or a user-defined Product Profile to prepopulate the appropriate Product Characteristic fields.

5. From the File menu, select Save.

   Note:

   Using the default currency to setup assumptions can save data input time. At runtime, 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 when using this option on UI where an Interest Rate Code is a required input. In most cases, you will want to use a currency-specific interest rate curves for pricing instruments within each specific base currency. The Default Currency option, if used will apply a selected Interest Rate Code across all currencies.

6. The Product Characteristic Details window has the following three input tabs:
   • All Business
   • New Business
   • Model Integration

Note:

The Model Integration tab will be available only if Moody's structured cash flow library integration is done with ALM.