1. User Guide
  2. HM Valuations Processing
  3. Valuations Processing
  4. Fair Value Level Hierarchy
  5. Similar Instruments

Similar Instruments

For Bonds, the application allows you to select a set of parameters based on which a set of similar instruments are identified. The Fair Value of the bond being valued is equal to the weighted average of the similar bonds (that were identified). Only if you select all the following parameters, then the Fair Value of the bond is assigned as Level 2:

  • Coupon Rate
  • Face Value
  • Rating
  • Interest Rate Code
  • Currency

If even one of the above parameters is not selected, then the Fair Value of that instrument is assigned a Level 3.

Note:

Currency is selected by default.