What is 'interest rate risk' in SAP FIN-FSCM-TRM-TM - Transaction Manager?

interest rate risk - Overview

• Component: FIN-FSCM-TRM-TM

• Component Name: Transaction Manager

• Description: A risk of potential losses in revenue or asset value resulting from changes in the market interest rate for: Fixed-interest transactions, where there is no offsetting transaction with matching maturity Floating rate transactions, where there is a risk of higher expenses or lower revenues Positions, that have to be written down to account for interest-related price losses

interest rate risk - Details

• 
  Key Concepts: 
  Interest rate risk is the risk that arises from changes in interest rates. It is a type of market risk that affects the value of financial instruments, such as bonds, loans, and derivatives. In the SAP Transaction Manager (FIN-FSCM-TRM-TM), interest rate risk is managed by setting up and maintaining interest rate curves, which are used to calculate the present value of future cash flows. 
  
  How to use it: 
  In the SAP Transaction Manager, users can set up and maintain interest rate curves to manage interest rate risk. This involves defining the parameters of the curve, such as the start date, end date, and frequency of payments. The curve can then be used to calculate the present value of future cash flows. 
  
  Tips & Tricks: 
  When setting up an interest rate curve in the SAP Transaction Manager, it is important to ensure that all parameters are correctly defined. This will ensure that the present value of future cash flows is accurately calculated. 
  
  Related Information: 
  For more information on managing interest rate risk in the SAP Transaction Manager, please refer to the official SAP documentation.