What is generation of hypothetical derivative in SAP FS-BA - Bank Analyzer?

SAP Term: generation of hypothetical derivative

• Component: FS-BA

• Component Name: Bank Analyzer

• Description: Manipulation method that generates hypothetical derivatives for swaps. The following applications call the function for the generation of hypothetical derivatives: Cash flow hedge analysis in the hypothetical derivative approach The fair value server during the fair value effectiveness test for cash flow hedging relationships in the hypothetical derivative approach

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• Key Concepts:
  Generation of hypothetical derivative is a feature of the FS-BA Bank Analyzer component of SAP. This feature allows users to generate hypothetical derivatives, such as options, futures, and swaps, based on the data stored in the system. This allows users to analyze the potential risks and rewards associated with different derivatives without actually trading them.
  
  How to use it:
  To use this feature, users must first enter the data for the underlying asset into the system. This includes information such as the current price, volatility, and other relevant data. Once this is done, users can then generate hypothetical derivatives based on this data. The system will then calculate the potential risks and rewards associated with each derivative.
  
  Tips & Tricks:
  When generating hypothetical derivatives, it is important to consider all of the potential risks and rewards associated with each one. This includes not only the potential gains or losses from trading the derivative, but also any other costs or fees associated with it. Additionally, it is important to consider how changes in market conditions may affect the value of the derivative over time.
  
  Related Information:
  For more information about generation of hypothetical derivatives in SAP FS-BA Bank Analyzer, please refer to the official SAP documentation. Additionally, there are many online resources available that provide more detailed information about this feature and how to use it effectively.