20.4 Dynamic Inflation Indexing Logic

Dynamic Inflation indexing, for New Business, follows a similar flow, except the logic of deriving Current Index Value and Base Index Value.

In the case of Dynamic Business Current Index Value is always obtained by looking up the forecasted Economic Indicator for Dynamic Cash Flow Date. The engine looks up into the forecasted Time Bucket.

Base Index Value is obtained by looking up the forecasted Economic Indicator for Dynamic Business Origination Date. This date is looked up into the forecasted Time Bucket, and the respective Index Data of that Time Bucket is obtained.

Note:

In Transaction Strategy, Base Index Value can either be entered into field Base Index Value or left blank. If it is blank, the engine will obtain Base Index Value from the forecasted Economic Indicator for defined Transaction Strategy Origination Date. This date is looked up into the forecasted Time Bucket, and the respective index data of that Time Bucket is obtained. If the Base Index Value is entered, the engine will consider it for calculation.