5.3 Application Specific Rules

This section explains about the Cash Flow Engine Cloud Service specific modules. This section covers the following topics:

1. Prepayment Rules: A Prepayment Rule contains methodologies to model the prepayment behavior of various amortizing instruments and quantify the associated Prepayment Risk.
2. Prepayment Models: Prepayment Mod­els can be referenced by a Prepayment Rule to Model Prepayment Behavior of instruments based on a range of instrument level attributes.
3. Behavior Pattern Rules: The Behavior Pattern Rule UI allows you to group Behavior Pattern codes (behavioral assumptions) together in a set at the Product/Currency level which then can be rotated to select a value on a combination.
4. Forecast Rates: Forecast Rate scenario assumptions allow you to define future interest rates, future economic indicators, and future currency exchange rates. Use interest rate forecasts to project cash flows, including pricing new business, re-pricing existing business, calculating prepayments, and determining discount methods. Use Economic Indicator forecasts to include in behavioral modeling and scenario/stress analysis. Use currency exchange rate forecasts to account for the effects of currency fluctuations on income.
5. Discount Methods: This module describes the procedure for working with and managing Discount Method Rules. Discount Method Rules allow users to define the method for discounting projected Cash Flows for mar­ket value and duration calculation purposes.
6. Cash Flow Process: This module discusses the procedure for creating and executing the Cash Flow Process. When all the required assumptions are defined, CFE Processing performs the calculation and generates a result set.