Treasury&RiskMgmt-FRA

What is FRA?? Please reply me a detailed way with examples in a business point of view??

Hi Blessy,
FRA is forward rate agreement. it is for aperiod. Example is 6/9 FRA means that the period start is six months and end is 9 months. During this period you will enter an interest rate swap. Again this swap will have a floating leg and a fixed leg. Those details will be entered in the system.
Hope this helps
best regards!
Sandip

Similar Messages

Treasury&RiskMgmt

Hi,
What is the definition of "SPREAD" in terms of finance. Please explain with some examples
Regards
Blessy

Spread is the difference between two similar measures In the stock market, for example, the spread is the difference between the highest price bid and the lowest price asked.
With fixed-income securities, such as bonds, the spread is the difference between the yields on securities having the same investment grade but different maturity dates.
For example, if the yield on a long-term Treasury bond is 6%, and the yield on a Treasury bill is 4%, the spread is 2%.
The spread may also be the difference in yields on securities that have the same maturity date but are of different investment quality.
For example, there is a 3% spread between a high-yield bond paying 9% and a Treasury bond paying 6% that both come due on the same date.
The term also refers to the price difference between two different derivatives of the same class.
For instance, there is typically a spread between the price of the October wheat futures contract and the January wheat futures contract. Part of that spread is known as the cost of carry. However, the spread widens and narrows, caused by changes in the market -- in this case the wheat market.

Treasury&RiskMgmt-Correspondence-Reconciliation flag

Hi,
ERP2005Ehp4 Release
SAP-FSCM -Product
In the customizing settings for the correspondence user can check the flag "Reconciliation"
What does it mean???
The customizing path is: SPRO --> Financial Supply Chain Management --> Treasury & Risk Management > Transaction Manager> General Settings --> Correspondence --> General Settings --> Assign Attributs for Business Partner Groups
Regards
Blessy

Hi,
I am sending only answers.If wrong pls correct me.
1.A,C
2.C
3.A,B,D,E
4.ACE
5.ABCD
6.B
7.BE
8.ALL
9.ABC
10.ABCDE
11.A
12.ABCD
13.E
14.BC
15.ALL
16.ABC
17.ACD
18.AC
19.B
20.ACDE
21.DE
22.B
23.ABCD
24.CD
25.C
26.BDE
27.BCE
28.C
29.CDE
30.BCDE
31.BDE
32.A
33.B
34.ALL
35.ABC
36.ALL
37.ABC
38.A
39.ACDE
40.AB
41.ABE
42.CD
43.ABCE
44.CD
45.ACDE
46.BD
47.AC
48.CD
I have sent answers for the questions.If any answer is wrong pls correct me.
Assign points if useful
Regards,
S.VINAYA KUMAR

Treasury&RiskMgmt - Exposure Management

Hi,
The context is "Report Logistics in logical database for exposures"
Here, What is meant by "Logistics" ???
Thanks & Regards
Blessy

Hi Blessy,
Can you explain a bit more, maybe with some transaction codes etc? Informative questions are more prone to get better responses
best regards!
Sandip

Treasury&RiskMgmt-Securities

Hi,
Please explain to me the below terms with examples
1) Price valuation procedure
2) Impairment procedure
Regards

Hi,
FWBS - Manual Posting is valid only for securities. I am just giving an example.
In securities there might be some charges for holding an account which is not periodical. Also there will be brokerage/ commisision involved for transactions which can be posted using manual posting.
Regards,
Ravi

Treasury&RiskMgmt-Hedging

What is meant by Fair Value Hedge and Cash flow hedge??

Hi
First you need to know what an hedge is
Hedging - In finance, a hedge is a position established in one market in an attempt to offset exposure to the price risk of an equal but opposite obligation or position in another market u2014 usually, but not always, in the context of one's commercial activity. Hedging is a strategy designed to minimize exposure to such business risks as a sharp contraction in demand for one's inventory, while still allowing the business to profit from producing and maintaining that inventory.
Fair Value Hedge
Fair value hedges primarily relate to fixed-interest balance sheet items (eg receivables, equities or securities), which are hedged against market ...
Cash flow hedge
A cash flow hedge is a hedge of the exposure to the variability of cash flow that
- is attributable to a particular risk associated with a recognized asset or liability. Such as all or some future interest payments on variable rate debt or a highly probable forecast transaction and
- could affect profit or loss
Cash flow hedges are primarily taken to mean hedges against the risk associated with future interest payments from a variable-interest balance sheet transaction by means of a swap. They are measured at their fair values.
check the below link for more details
http://www.attuariale.com/ias39.php?language=English
hope this helps
regards,
radhika

Treasury&RiskMgmt-Option

Hi,
I will explain one example contains the process sell/buy options. Please go through this and advise me on the same
EUR/USD
Spot price : 1.40
Strike Price: 1.45
a) SellCall
b) SellPut
c) BuyCall
d) BuyPut
Which options will exercise (a,b,c,d)
1. If the current price is 1.40
2. If the current price is 1.45
3. If the current price is 1.50
and what is the reason for exercising those optins???
Regards
Blessy

Hi Blessy,
A very nice question. maybe the same can be executed also in the system.
Best regards!
Sandip

Treasury&RiskMgmt-Stocks

Hi,
Please explain what is Spot, Strike, Forward prices with examples???
Regards
Blessy

Hi,
Spot is nothing but the current price, while stike price is the price which you are going to fix in your option. Suppose you have an option between USD/EUR, then exchange rate price is spot price while the price on the exercise date for this option is the strike price. Ultimately strike price will be price at which this option will be exercised.
Future price is nothing but the price in the case of futures contract. A future contract is an obligation for both buyer and seller i.e one has to sell and the other has to buy. While in the case of option, either the buyer or the seller wil have the option to buy or sell.
Regards,
Ravi

Treasury&RiskMgmt-Transaction Manager- Money market

Hello Colleague,
In the creation of Money market - Fixed Term Deposit - investment , one select box for Capitalize interest is present
What does this capitalize interest means?? why it is in the Money market?

Hi,
It depends on country you are using.
if you check capitalize interest, interest would be added to your deposit account i.e. asset account. Then it means that interest amount has also been added to the asset and hence we will not pay tax on interest amount. This is generally done, when you invest back the money which you got from deposit including interest. Then since you are investing, you won't pay tax for it i.e you are using the money.
If you have not checked the capitalize interest, then you will get the interest amount to your bank or cash and hence it is a revenue, thus you will have to pay tax for interest amount alone depeding on the amount and also the country.
P.S: If the question is answered kindly close the question.
Regards,
Ravi
Edited by: Ravishankar Ramamurthy on Jul 8, 2009 5:57 PM

Treasury Management Curriculum Location

On March 29 I sent one of my customers the following information which I cut and pasted from the UA web site. Now I can't find it.
+In the TMP module the students use an ERP system (in this case SAP) to work in the field of Treasury Management. In this module the ERP system used, SAP, is not a goal in itself, but provides a means of experiencing the many aspects of treasury management. The emphasis lies on anything to do with the management of money flows. Tendering, winning orders, purchasing, invoicing, payments and receipts, and reacting to liquidity shortages / surpluses u2013all in different currencies u2013 generate the problems that every treasurer has to deal with.++ In this module, students are appointed as assistant-treasurer in a u201Cgoing concernu201D, DDS Management Consultancy, which uses SAP as administration and information system. The system is already loaded with data such as client and supplier data, accounts receivable and debts, and ledger and bank accounts.
DDS carries out consultancy and training assignments for its clients, and if necessary hires external consultants. DDS acquires its assignments in u201CEurolandu201D and beyond and consultants are employed in various countries.
A great variety of problems are raised with a limited number of assignments. Students must prepare and maintain a rolling liquidity plan, hedge foreign exchange positions, borrow or invest short term, prepare a long-term loan and manage receivables and payables. For this, use is made of what the market has to offer in terms of financial instruments and derivatives: deposits, loans, FRAs, futures, options, swaps, spot and forward transactions, etc.
Use is made of real market rates and prices that can be found in newspapers, on the internet, or possibly by telephoning a bank.
The management of money flows is a hot item for many companies. Good treasury management saves money. Great savings in management and bank costs can be achieved by centralising money flows - millions of euros a year for large multinationals.
Working for some months with DDS as an assistant-treasurer provides a student with some experience in this field at zero cost now, but with a high return in the future.
It is under the Treasury Managemenrt Project (hence the TMP).
Edited by: Atis Purins on Apr 5, 2010 2:20 AM

On March 29 I sent one of my customers the following information which I cut and pasted from the UA web site. Now I can't find it.
+In the TMP module the students use an ERP system (in this case SAP) to work in the field of Treasury Management. In this module the ERP system used, SAP, is not a goal in itself, but provides a means of experiencing the many aspects of treasury management. The emphasis lies on anything to do with the management of money flows. Tendering, winning orders, purchasing, invoicing, payments and receipts, and reacting to liquidity shortages / surpluses u2013all in different currencies u2013 generate the problems that every treasurer has to deal with.++ In this module, students are appointed as assistant-treasurer in a u201Cgoing concernu201D, DDS Management Consultancy, which uses SAP as administration and information system. The system is already loaded with data such as client and supplier data, accounts receivable and debts, and ledger and bank accounts.
DDS carries out consultancy and training assignments for its clients, and if necessary hires external consultants. DDS acquires its assignments in u201CEurolandu201D and beyond and consultants are employed in various countries.
A great variety of problems are raised with a limited number of assignments. Students must prepare and maintain a rolling liquidity plan, hedge foreign exchange positions, borrow or invest short term, prepare a long-term loan and manage receivables and payables. For this, use is made of what the market has to offer in terms of financial instruments and derivatives: deposits, loans, FRAs, futures, options, swaps, spot and forward transactions, etc.
Use is made of real market rates and prices that can be found in newspapers, on the internet, or possibly by telephoning a bank.
The management of money flows is a hot item for many companies. Good treasury management saves money. Great savings in management and bank costs can be achieved by centralising money flows - millions of euros a year for large multinationals.
Working for some months with DDS as an assistant-treasurer provides a student with some experience in this field at zero cost now, but with a high return in the future.
It is under the Treasury Managemenrt Project (hence the TMP).
Edited by: Atis Purins on Apr 5, 2010 2:20 AM

SAP Material on FOREX, FRA

Dear All,
Can anybody tell where i will get the material on forex & fra products inTRM .
Regards
Pramod

Hi,
Check help.sap.com for basic materials about these products and also how to work on these in SAP. It will provide you with some useful information. Check under financials - FSCM and under that treasury and risk management.
Regards,
Ravi

Treasury - Contract Expired - Any follow-up activities

We had our first treasury contract mature in SAP since we went live and I'm not sure if any follow-up activities need to be done. The contract is in status 'settlement.' Is there a way to get the contract into an expired/matured type status?

HI
The settlement stage is the last stage of a transaction based on it's processing category.
You can define your own processing steps ( unfortunately ))
Malolan R
SAP Treasury

ASM Disk preparation for Datafiles and FRA in Oracle 10g RAC Inst

Dear Friends,
Please clarify wheteher the below method is correct to confiure ASM disks for Datafiles and FRA
Partitions provided by IT team for OCR and Voting Disk
/dev/sda1 - 150 GB (For +DATA)
/dev/sda2 - 100 GB (For +FRA)
OS : RHEL 5.6 (64 Bit)
kernel version = 2.6.18-238.el5
Steps:(Node1)
1) Install the RPM's for ASM
rpm -Uvh oracleasm-support-2.1.7-1.el5.x86_64.rpm
rpm -Uvh oracleasm-2.6.18-238.el5-2.0.5-1.el5.x86_64.rpm
rpm -Uvh oracleasmlib-2.0.4-1.el5.x86_64.rpm
2) Configure ASM
/etc/init.d/oracleasm configure
Default user to own the driver interface []: oracle
Default group to own the driver interface []: dba
Start Oracle ASM library driver on boot (y/n) [n]: y
Scan for Oracle ASM disks on boot (y/n) [y]:
Writing Oracle ASM library driver configuration: done
Initializing the Oracle ASMLib driver: [ OK ]
Scanning the system for Oracle ASMLib disks: [ OK ]
3) Cretae ASM Disk
/etc/init.d/oracleasm createdisk DISK1 /dev/sda1
/etc/init.d/oracleasm createdisk DISK2 /dev/sda2
4)/etc/init.d/oracleasm status
5)/etc/init.d/oracleasm scandisks
6)/etc/init.d/oracleasm listdisks
7) Nothing to perform on Node2
8) In dbca choose ASM and map the DISK1 for datafiles and DISK2 for FRA
Please confirm the above steps are right?if not please clarify
If DBCA ->ASM doesn't discover my disk then what should be the Discovery path i have to give?
Please refer any document / Metalink ID for the above complete process
Can i have ASM and oracle DB binary in the same home
Regards,
DB

user564706 wrote:
If DBCA ->ASM doesn't discover my disk then what should be the Discovery path i have to give?for asm disk created with oracleasm discovery path variable is ORCL:*
Please refer any document / Metalink ID for the above complete processhttp://docs.oracle.com/cd/B19306_01/install.102/b14203/storage.htm#BABIFHAB
Can i have ASM and oracle DB binary in the same homeyes. unless you want job role seperation or plan to run multiple versions of oracle homes
>
Regards,
DB

Interest Rate Instruments in Treasury

Hello SAP Gurus
We are using SAP Treasury Product (55A u2013 Interest Rate Instrument) to meet one of our business requirements. We are creating Investment deal/contract with a variable interest. We are also maintaining the Interest Rate Values in transaction code JBIRM on daily basis.
The business requirement is here that they want to calculate the interest value on daily as per rate maintained in transaction code JBIRM and pay on Monthly Basis.
If I am selecting the frequency monthly in Interest Structure Tab and executing transaction code TJ05 to update the interest rate in the deal/Contract. It is not updating correctly. It is taking only one interest rate not alls.
If I set frequency Daily in Interest Structure Tab and executing transaction code TJ05 to update the interest rate in the deal/Contract. It is updating correctly. But the Issue is here that than it is creating interest accounting entry on daily basis. We do not want to create Interest Entry on Daily.
Could you please help me to update the interest rate on daily basis and calculate the Interest Value accordingly and ay on Monthly?
Thanks and Regards,
Amit Kumar Jain

To calculate interest based on a daily rate, but only post interest monthly, you have to maintain the interest and interest rate adjustment conditions with different frequencies.
In the deal, click on the conditions button. You should see a condition 1200 - Nominal interest and because you have used a variable interest rate, you should also see a condition 1210 - Interest rate adjustment. To post interest monthly, you need to set the Nominal interest (1200) condition to Regular update with Frequency of 1 Month. To enter daily interest rates, you need to also set the Interest rate adustment (1210) to Regular update, however the frequency should be 1 Calendar day.
In addition, if you will not have interest rates for weekends and banking holidays, you can set the calendar rule to next or previous working day to and enter a factory calendar that has been configured with weekends and banking holidays as non-working days. Whether you select next or previous working day depends on how the bank calculates interest for the weekends/holidays. For example, if the bank uses the rate from Friday to calculate interest for Saturday and Sunday, you would select previous working day. If however, it uses Monday to calculate the interest, then you would select next working day.
I'm not clear on the issue you are experiencing with TJ05. Can you explain furthe rwhat you mean when you say that it is taking only one interest rate, not all?
Regards,
Amit

Error while creating position indicator in Treasury

Hi,
I got an error message "No differentiation was defined in Customizing for this position" while creating position indicator in Treasury Mgt for Securities ( TPM55A).
Message no. TPM_TRL098
Please help me on this issue. Very urgent.
Thanks & Regards,
Shaik.A

HI,
I have resolved the issue.
Maintained Sec.Acct.
FSCM-Treasury & Risk Mgt-Transaction Mgr-General Settings-Accounting-Settings for position Mgt-Define and Assign Differentiations
Regards,
Shaik.A
Edited by: shaik A on Mar 31, 2008 1:14 PM

Treasury&RiskMgmt-FRA

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