Pricing a snowball centers mainly around the specification of its coupons. You can of course define the coupon parameters using the relevant fields in the pricing page, whereby the details you enter are then used for all coupons, as relevant.
However, you can better control the coupon definitions if you define them using the Coupon Structuring window. You access this window by clicking the Coupon Structuring button in the pricing page.
This window lets you specify different parameters for each coupon as required.
In the Coupon Structuring window:
Each row defines the coupon payment formula parameters for one or more consecutive coupons.
All Coupon # cells must be filled.
The value entered in the Coupon # column of the first row must be 1.
The Until cells are optional. If you leave:
The Until cell in an intermediary row blank, the system assumes that the parameters for this coupon should be applied to all coupons until the coupon defined in the next row.
The Until cell in the last row blank, the system assumes that the parameters for this coupon should be applied to all coupons from this one up until the last coupon.
If you define the parameters for the coupons in the Coupon Structuring window, it is important to note:
When you save the changes in this window, any values defined in the coupon fields in the pricing page are overwritten with these new values.
If a parameter was set in the Coupon Structuring window to:
The same value for all coupon periods, that value will be displayed in the pricing page.
Different values for different coupon periods, the word Variable will be displayed in the pricing page, as shown in Figure 1.
| Figure 1: | Coupon Values Shown as Variable in the Pricing Page |
The following topics are covered:
Columns in the Coupon Structuring window
What Can Be Done in the Coupon Structuring Window