What is 'lifetime expected loss' in SAP FS-BA-PM-SFA - Smart Accounting for Financial Instruments?

lifetime expected loss - Overview

• Component: FS-BA-PM-SFA

• Component Name: Smart Accounting for Financial Instruments

• Description: A methodology for determining risk provision in . This methodology is used to enter all the losses expected over the entire term of a contract. A default can occur at any time during the term of the contract.

lifetime expected loss - Details

• 
  Key Concepts: 
  Lifetime expected loss is a term used in the FS-BA-PM-SFA Smart Accounting for Financial Instruments component of SAP. It is a measure of the expected losses that will be incurred over the lifetime of a financial instrument. It is calculated by taking into account the current market value of the instrument, its expected future cash flows, and any associated risks. 
  
  How to use it: 
  The lifetime expected loss can be used to assess the risk associated with a financial instrument and to determine whether it is worth investing in. It can also be used to compare different instruments and decide which one is the most suitable for a particular investment strategy. 
  
  Tips & Tricks: 
  When calculating the lifetime expected loss, it is important to take into account all relevant factors such as market conditions, interest rates, and any associated risks. It is also important to consider the time horizon of the investment when calculating the expected losses. 
  
  Related Information: 
  The lifetime expected loss is closely related to other financial terms such as expected return, risk-adjusted return, and net present value. It is also related to other SAP components such as FS-BA-PM-SFA Smart Accounting for Financial Instruments and FS-BA-PM-SFA Smart Accounting for Risk Management.