8.18.9 Moving Averages

Under this method, a user-definable moving average of any point on the transfer pricing yield curve can be applied to a transaction record to generate transfer prices. For example, you can use a 12- month moving average of the 12-month rate to transfer price a particular product.

The following options become available on the user interface (UI) with this method:

• Interest Rate Code: Select the Interest Rate Code to be used as the yield curve togenerate transfer rates.
• Yield Curve Term: The Yield Curve Term defines the point on the Interest Rate Code thatis used.
• Historical Range: The Historical Range defines the period over which the average iscalculated. The following table shows the difference between the Yield Curve and Historical Terms.

  Table 8-8 An Example of Yield and Historical Terms

  Moving Average	Yield Curve Term
  Six-month moving average of 1-year rate	1 year (or 12 months)
  Three-month moving average of the 6-month rate	6 months

The range of dates is based on the As of date minus the historical Range plus one, because the historical Range includes the As of date. Oracle Asset Liability Management takes the values of the yield curve points that fall within that range and does a straight average on them.

For example, if As of Date is Nov 21, the Yield Curve Term selected is Daily, and the Historical Range selected is 3 Days, then, the system will calculate the three-day moving average based on the rates for Nov 19, 20, and 21. The same logic applies to monthly or annual yield terms.