Use

To map variable interest rates you need to make two types of entries.

1. In condition position Nominal interest you define the underlying reference interest rate and the calculation method for the variable interest rate.

2. In condition item Interest adjustment you define the frequency with which you want the variable interest rate to be recalculated or become effective, and the date you want to establish the reference interest rate value for determining the variable interest rate.

Prerequisites

It is recommended that you maintain the reference interest rate table regularly so that current data is available for interest rate fixing.

Procedure

1. Enter the Eff. from date.

2. Branch to the Condition Details screen .

The screen is divided into two areas: Interest rate adjustment and Interest rate fixing rate :

3. In the Interest rate adjustment area, you enter the frequency with which you want the variable interest to be recalculated or become effective. The following alternatives are available:

a. At start of period

b. Frequency with fixed date

c. Single dates

You use the Single dates option to represent interest rate adjustments that recur annually. and which you cannot display via At start of period and Frequency with fixed date.

Interest rate adjustment takes place annually on 03/15 and 10/15.

You can only show this irregular sequence of interest rate adjustment dates via Single dates.

d. For each table entry

Each time you change the reference interest rate, the interest is adjusted.

4. In the Interest rate fixing date section, you define when you want to determine the interest rate value for calculating the new variable interest rate. You can choose from the following:

a. Relative to interest rate adjustment date

b. Relative to start of period

c. Relative to end of period

d. Relative to due date

In the field below, enter how many days beforehand the interest rate fixing is to take place.

Also define which calendar you want to use for determining the date.

5. You can use the Dates button to display the interest rate adjustment dates. The system displays the following dates per interest rate adjustment:

a. Eff. from date of the new interest rate (interest rate adjustment date)

b. Interest fixing date

c. Percentage fixing date (this can differ from the interest fixing date, if no entry has been made in the reference interest rate table. The system therefore chooses the previous entry).

d. New interest rate