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Former Member
Nov 24, 2016 at 08:43 PM

TRM Securities Effective Interest Calculation

629 Views Last edit Nov 29, 2016 at 12:07 PM 3 rev

Hello,

I’m implementing TRM Securities. I’m having an issue regarding the Effetive Rates.

When i buy a Bond with Payment Value diferente from the Nominal Value, due to Price/Quotation diferente from 100% the system calculates a new Interest Rate (Effetive Interest Rate). So far so good.

But the project is telling me that we need to post the nominal interest (with the rate defined in FWZZ) but also calculate and post the amount of interest we would have if the interest rate would be the one set in Effetive Interest Rates.

Because the difference between these two would tell me if i’m actually gainning or losing in this bond.

Does anyone ever had this request? How to post these values calculated from the Effetive Interest Rate?

I’m attaching the exemple:

Currency EUR

Nominal Value 300.000

Purchase Amount 336.306

Interest when Buying 3.996

Date 18-03-2016

Maturity 09-11-2020

Cupon Rate 3,75%

Effetive Interest Rate Calculated by SAP = 1,0636755% (Correctly Calculated)

Nominal Interest Value = Nominal Value * Cupon Rate = 11.250€

Effective Interest Value (1st Year) = Purchase Amount * Effetive Interest Rate = 3.577,20€

Profit/Cost with Interest = Effetive Interest Value - Nominal Interest Value = - 7.673,80€

Correct Bond Value (1st Year) = Purchase Amount – Profit/Cost with Interest = 328.633,20€

In the following years the Effetive Interest Value changes as shown:

Effetive Interest Value (Year n) = Correct Bond Value (n – 1) * Effetive Interest Rate

So in we end up by having something like i'm attaching in file.sap-example.jpg

Again, has anyone done something like this?

Thank you very much,

Nuno Anjos

Attachments

sap-example.jpg (52.3 kB)