11.16 Analyze Results
You should always analyze results obtained from the Transfer Pricing Engine. For example, you should review the historical rate information (Interest Rate Codes) to ensure that the new cost of funds reflects the current interest rate reality.
Additionally, a detailed Transfer Rate/matched spread query should be generated at the product level to ensure that every account has been assigned a Transfer Rate and that the matched spread for each account is as expected.
The following table lists some steps to find out whether an account has not been Transfer Priced correctly.
Table 11-27 Steps to Analyze Transfer Pricing Results
| Query | Results |
|---|---|
| Stratification by the transfer rate | Look for any transfer rate <= a selected value (such as 3.00) or >= another value (such as 12.00) |
| Stratification by the matched spread | Look for large (positive or negative) matched spreads. (for example, >= 4.00 or <= -2.00) |
| Stratification of fixed-rate instruments by origination date and term with weighted average transfer rate and matched spreads as columns | Look for a general pattern to reflect the Transfer Pricing Yield Curves for each origination date |
| Stratification of adjustable-rate instruments by last repricing date and term with weighted average transfer rate and matched spreads as columns | Look for a general pattern to reflect the Transfer Pricing Yield Curves for each last repricing date |
The weighting factor for CONVEXITY, DURATION, and MODIFIED_DURATION is Market Value. The weighting factor for YTM, CUR_WARM, and AVERAGE_LIFE are weighted by cur par bal.
In case a result (transfer rate) generated by the system is suspect, then you can view all of the cash flows for any specified instrument record, by selecting the Detailed Cash Flow option in either the Standard or Stochastic Transfer Pricing Process. This option should be selected together with a filter, which identifies the specific instruments to be included in the Audit process.
After ensuring that each account has been assigned an accurate transfer rate, you should review the funding center's impact and compare it to the results from prior periods.