Zero Bonds 

Definition

• When flows leave the position (sale, securities account transfer, repayment), the system generates interest capitalization flows for the interest due up to the key date for the outflow amount as a planned record. The planned record is posted when you perform the period-end closing.
• When you use the Amortization function, the system generates the interest capitalization flows for a particular key date and increases the book value of the position to the net present value calculated on the key date.
• If you sell a bond before it matures, the system calculates the net present value for the key date of the sale and displays the difference between the net present value calculated and the sale value as a price gain or price loss.
  
  The system calculates all position value dates ‘inclusively’. Example: When you purchase a bond on 01/08 and sell it on 01/12, the interest capitalization amount is calculated for 5 days.
• After you have run the Amortized report program, you can still perform rate/price valuation ( Rate/Price Valuation), if required. This compares the new book value with the current market value on the key date and calculates any write-ups/write-downs (according to the rules defined in the valuation principle).

• We recommend that you create a product type specifically for zero bonds.
• You must have assigned the 'Net SAC' position management procedure to the zero bond positions in Customizing for securities by choosing Transaction and Position Management ® Basic Settings ® Assign Position Management Procedure.

2. Create the Position Indicator for the class.

Editing a Class