22.2 Defining Prepayment Methodologies

The assignment of prepayment assumptions is part of the Create or Edit Prepayment Rule Process where assumptions about loan prepayments or deposit early redemptions are made for product-currency combinations. When you click Save in the Create Prepayment Rules Process, the Rule is saved and the Prepayment Rule Summary Page is displayed. However, prepayment assumptions have not yet been defined for any of your products at this point. Typically, you would start defining your prepayment assumptions for product-currency combinations before clicking Save.

The Prepayment Rule supports the definition of prepayment assumptions for combinations of two dimensions: Product and Currency.

Once you have created a Prepayment Rule, you can assign prepayment methodologies to product-currency combinations using Node Level Assumption.

• By creating a conditional assumption using conditional logic. For more information, see Associating Conditional Assumptions with Prepayment Rules section.
• Directly on the Prepayment methodology page, as described here.

• Defining Assumptions with the Default Currency
  For cases where you have the same assumption (method and IRC) which is applicable to all currencies or multiple currencies, you can define rules for the combination of Product and Default Currency.
• Defining Constant Prepayment Method
  
• Defining Prepayment Model Method
  
• Defining PSA Prepayment Method
  
• Defining the Arctangent Calculation Method
  
• Defining Early Redemption Assumptions