Main Menu | Adv. Income Shock
When entering the Advanced Income Shock module, the display defaults to the Assumptions tab and the Growth page.
Four sets of assumptions, provided by the user, are needed in the Advanced Income Shock module.
Growth
Under the Growth tab, also referred to as Target Balance Assumptions (targeted growth), assumptions are made on the future structure of the institution's balance sheet. You can target ending balances as well as average balances.
Index Rates
Under the Index Rates tab, assumptions are made as to what rates a particular index changes to in a specific shock scenario. The fact that the user has to make assumptions for each index provides the means to model a non-parallel shock.
Reinvestment
Under the Reinvestment tab, the pricing assumptions are made for new and renewed items. Those are the volumes the system generates automatically to replace runoff on existing items and to reach the target volumes as specified by the user.
Prepayments
In the Prepayment tab, predictions are made on the annual percentage rate of prepayments under the various shock scenarios.