Re: Accrued interest adjustment of the amortization (poduct cat. 550)For security valuation you don't need effective rate calculation. So we enter market rates values that are linked to yield curve.
According to IAS39 all cash flows of a deal (including interest payments) should be discounted using effective interest rate method and the sum of the discounted flows gives amortized value. I'm not sure it can be reached using security valuation (as far as I know it doesn't take into account interest flows). Besides SAP has very useful tool Amortization log, showing the way amortization is calculated and the calculated effective interest rate.
Sorry I'm not sure I understood the idea.
As far as I know TPM60 calculate NPV by discounting future cash flows. And the basic idea of net present value calculation is discounting approach. I'm not aware of other opportunities here.
Could you please give an example.
I mean that fair value of the interest rate instrument at the start date (given the interest rate is not much deviated from market rate) equals the difference between nominal value and the costs related to this instrument.
Yes, 'Permit Premium/Discount' check affords to do that, but in this case discount amount is not dependent on the flows, it is just put manually.
Finally I found the way: I used customizing 'Set the Effects of the Update Types on the Position Components' and assigned Position change category 1014 to update type of the charges flow. When the flow is posted, the fair value decreases.