5.3.2.5.1.3 Defining Economic Indicator Dependent Rate Dependency Patterns
With the Economic Indicator Dependent Relationship, you can input assumptions for different levels of a selected Economic Indicator. The only required selection for this method is the type of Economic Indicator. You can select the Economic Indicator from all available Economic Indicators for the selected Currency, as defined.
Figure 5-188 Rate Dependency Pattern Rule after selecting Economic Indicator option
- Enter the following details:
Table 5-50 Form Fields to Create a New Rate-Level Dependent Rate Dependency Pattern Rule
Fields Description Economic Endicator Select the Economic Indicator. Lookup Method
The lookup method determines which new business assumption is selected from the input values when the forecasted interest rate falls between two rate tiers. There are two methods to choose from:
Interpolate: If you select Interpolate, the assumption is an interpolated value, using straight line interpolation, calculated from the assumptions associated with the two nearest interest rate tiers. The interpolation uses a simple straight-line interpolation formula.
Range: If you select Range, Oracle ALM selects the new business assumption as the closest assumption associated with the rate tier which is less than or equal to the forecasted interest rate.
Note:
Range method is always used to interpret maturity mix forecast assumption.Note:
When the lookup method is “range” and the retrieved value is less than the lowest tier, then no rule is applied.Rate Tiers You must define rate tiers. Rate Tiers provide the lookup values for which different assumptions can be input.
Select Add Rows to add the number of Rate Tiers to include in your pattern.
Input the appropriate Rate Level for each Rate Tier.
Note:
You must enter minimum 2 tiers. The maximum limit is 10. - Select Save to complete the definition.