System and process for converting constant dollar financial instruments

• US 5,237,500 A
• Filed: 02/27/1990
• Issued: 08/17/1993
• Est. Priority Date: 02/27/1990
• Status: Expired due to Term

• Current Assignee: Realvalue Limited Partnership
• Original Assignee: Realvalue Corporation
• Inventors: Perg, Wayne F., Brumley, Lyndel D.
• Primary Examiner(s): Hayes, Gail O.
• Application Number:
  US07/485,543
• Time in Patent Office: 1,267 Days
• Field of Search: 364/408
• US Class Current: 705/35
• CPC Class Codes: G06F 40/18 of spreadsheets form-filling G06F40/174
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

The present invention discloses a method and apparatus for converting constant-dollar financial instruments into equivalent nominal-dollar instruments. After the optimal form or forms of constant-dollar financial instruments have been determined for the purposes of financing a specific enterprise or activity, the data describing the constant-dollar financial instrument or instruments are entered into the system together with the specified inflation measure and the desired frequency of adjustments to the nominal-dollar interest rate and to the nominal-dollar payments. The data processing system puts the specified constant-dollar instrument or instruments into a standardized format and, given the desired frequency of inflation adjustments to be made to the nominal-dollar interest rate and to the nominal-dollar payments, the system specifies the equivalent nominal-dollar instrument or instruments in a standardized format. Every payment and/or compounding period the data processing system calculates the nominal-dollar interest rate(s), nominal-dollar payment(s), nominal-dollar call price(s), and remaining nominal-dollar principal balance for the equivalent nominal-dollar instrument or instruments.

Claims

1. An apparatus for producing a standard form constant-dollar financial instrument expressed in equivalent nominal-dollar terms, comprising:

input means for inputting input data to specify a constant-dollar financial instrument, including primary components of the specified constant-dollar financial instrument, and a measure of inflation, base period and frequency of adjustment for inflation to be used, said primary components comprising an interest rate or rate of return specification, said specification including the convention chosen to express the interest rate or rate of return;

first memory means for storing the input data entered through said input means;

second memory means for storing a standard form for the primary components of the specified constant-dollar financial instrument, including a standard convention for expressing the interest rate or rate of return;

detecting means for detecting in said first memory means primary components of the financial instrument that include constant-dollar figures;

comparison means for comparing the form of the detected primary components with the stored standard form, including a comparison of the input interest rate or rate of return specification with said standard convention;

determining means for determining appropriate bases for transforming any non-standard primary components of the instrument into said standard form, including bases for transforming the input interest rate or rate of return specification into said standard convention;

first converting means for converting the non-standard primary components of the instrument into said standard form utilizing said transformation bases;

defining means for defining a measure of inflation consistent with said standard convention utilizing the input measure of inflation and base period;

second converting means for converting the standard form primary components of the instrument into equivalent nominal dollar components based upon the defined measure of inflation; and

output means for outputting a constant-dollar financial instrument expressed in equivalent nominal-dollar terms, corresponding to said input data.

2. The apparatus of claim 1 wherein said primary components comprise rate of return, payment schedule, amortization schedule, terms and covenants.

3. The apparatus of claim 1 wherein said primary components comprise a rate of return component, said apparatus further comprising means for transforming the rate of return component of the specified constant-dollar instrument into an effective annual rate of interest.

4. The apparatus of claim 1 further comprising means for searching terms and covenants of the specified constant-dollar instrument stored in said first memory means for any figures defined in constant-dollars and using said frequency of adjustment for inflation and said measure of inflation, converting said constant-dollar figures into equivalent nominal-dollar figures for every adjustment period.

5. A method for producing with an automated data processing system a constant-dollar financial instrument expressed in equivalent nominal-dollar terms, comprising the steps of:

inputting input data to specify a constant-dollar financial instrument, including primary components of the specified constant-dollar instrument, and a measure of inflation, base period and frequency of adjustment for inflation to be used, said primary components comprising an interest rate or rate of return specification, said specification including the convention chosen to express the interest rate or rate of return;

storing in a first memory the input data entered through said input means;

detecting in said first memory primary components of the financial instrument that include constant-dollar figures;

comparing the form of the detected primary components with a stored standard form, including comparing the input interest rate or rate of return specification with said standard convention;

determining appropriate bases for transforming any non-standard primary components of the instrument into said standard form, including bases for transforming the input interest rate or rate of return specification into said standard convention;

converting the non-standard primary components into the standard form utilizing the transformation bases;

defining a measure of inflation consistent with said standard convention utilizing the input measure of inflation and the base period;

converting the standard form primary components of the instrument into equivalent nominal-dollar components based upon the defined measure of inflation; and

outputting a constant-dollar financial instrument expressed in equivalent nominal-dollar terms, corresponding to said input data.

6. The method of claim 5 wherein the step of outputting the primary components of the equivalent nominal-dollar financial instrument comprises the steps of outputting the rate of return, payment schedule, amortization schedule terms and covenants.

7. The method of claim 5 wherein said primary components comprise a rate of return component, further comprising the step of transforming the rate of return component of the specified constant-dollar instrument into an effective annual rate of interest.

8. The method of claim 5 further comprising the step of searching terms and covenants of the specified constant-dollar instrument stored in said first memory for any figures defined in constant-dollars and using said frequency of adjustment for inflation and said measure of inflation, converting said constant-dollar figures into equivalent nominal-dollar figures for every adjustment period.

9. An apparatus for converting a constant-dollar financial instrument into an equivalent nominal-dollar instrument comprising:

input means for inputting input data to specify a constant-dollar financial instrument, including primary components of the specified constant-dollar financial instrument, and a measure of inflation, base period and frequency of adjustment for inflation to be used, said primary components comprising an interest rate or rate of return specification, said specification including the convention chosen to express the interest rate or rate of return;

first memory means for storing the input data entered through said input means;

second memory means for storing a standard form for the primary components of the specified constant-dollar financial instrument, including a standard convention for expressing the interest rate or rate of return;

comparison means for comparing the form of the primary components entered through said input means with the stored standard form, including a comparison of the input interest rate or rate of return specification with said standard convention;

first converting means for converting any non-standard primary components of the instrument into said standard form and defining a measure of inflation consistent with said standard convention utilizing the input measure of inflation and base period, said first converting means comprising means for generating a constant-dollar payment schedule and a constant-dollar amortization schedule for the specified constant-dollar financial instrument;

second converting means for converting the specified constant-dollar financial instrument into an equivalent nominal-dollar instrument by converting the standard form primary components of the instrument into equivalent nominal dollar components based upon the defined measure of inflation; and

output means for outputting output data relating to the equivalent nominal-dollar instrument, including said equivalent nominal dollar components.

10. The apparatus of claim 9 wherein said converting means converts the specified constant-dollar financial instrument into an equivalent nominal-dollar instrument by calculating an equivalent nominal-dollar interest rate, converting the constant-dollar payment schedule into an equivalent nominal-dollar payment schedule and determining the equivalent nominal-dollar amortization schedule.

11. The apparatus of claim 10 wherein said equivalent nominal-dollar interest rate, r_t, is defined by the following formula:

space="preserve" listing-type="equation">r.sub.t =(1+R.sub.t)·

(1+I.sub.t)-1;

space="preserve" listing-type="equation">for t=1, . . . ,y·

n;

where t is the adjustment period, I_t is a measure of inflation for the adjustment period t and R_t is the constant-dollar rate of return for adjustment period t.

12. The apparatus of claim 10 wherein when the specified constant-dollar financial instrument has a number of payments per period equal to the number of adjustments per period, the nominal-dollar payment schedule is defined as follows:

##EQU4## where p_t is the equivalent nominal-dollar payment in adjustment period t;

P_t is the constant-dollar payment in adjustment period t;

I_i is the inflation rate in adjustment period i;

n is number of periods to maturity of the instrument; and

y equals the number of inflation adjustments per period.

13. The apparatus of claim 10 wherein when the specified constant-dollar instrument is specified to be fully amortized over n periods with equal constant-dollar payments x times per period, and the number, y, of adjustments for inflation each period is less than x, the equivalent nominal-dollar payment schedule is defined as follows:

##EQU5## where P_t *x/y-i+1, i=1, . . . ,x/y, are the x/y equal nominal-dollar payments in adjustment period t;

B_o is the original amount borrowed in constant-dollars;

R is the fixed constant-dollar rate of return;

I_j is the inflation rate for period j; and

r_t is the equivalent nominal-dollar rate of return for adjustment period t.

14. The apparatus of claim 13 wherein the nominal-dollar amortization schedule is defined as follows:

space="preserve" listing-type="equation">b.sub.t =b.sub.t-1 (1+r.sub.t).sup.1/x -p.sub.t ;

space="preserve" listing-type="equation">for t=1, . . . ,x·

n;

where b_t is the scheduled nominal-dollar loan balance in period t;

r_t is the equivalent nominal-dollar interest rate in period t; and

p_t is the nominal-dollar loan payment in period t; and

b_t-1 is the nominal dollar loan balance for the previous period.

15. The apparatus of claim 10 wherein when the specified constant-dollar financial instrument has a variable constant-dollar rate of return and a fixed constant-dollar amortization schedule, the converting means determines the equivalent nominal-dollar amortization schedule before converting the constant-dollar payment schedule into an equivalent nominal-dollar payment schedule.

16. The apparatus of claim 15 wherein the equivalent nominal-dollar amortization schedule is defined as follows:

##EQU6## where b_t is the scheduled nominal-dollar loan balance for period t;

B_t is the scheduled constant-dollar loan balance for period t; and

I_i is the inflation rate for period i; and

x is the number of payments per period.

17. The apparatus of claim 16 wherein the nominal-dollar payment schedule is defined as follows:

space="preserve" listing-type="equation">P.sub.t =(1+r.sub.t).sup.1/x ·

b.sub.t-1 -b.sub.t ;

space="preserve" listing-type="equation">t=1, . . . ,x·

n

where P_t is the nominal-dollar payment in period t;

r_t is the equivalent nominal-dollar rate of return in period t; and

b_t is the equivalent nominal-dollar loan balance in period t.

18. The apparatus of claim 10 further comprising determining means for determining if the specified constant-dollar instrument has a fixed rate of return.

19. The method of claim 9 wherein the step of converting the specified constant-dollar financial instrument into an equivalent nominal-dollar instrument comprises the steps of calculating an equivalent nominal-dollar interest rate, converting the constant-dollar payment schedule into an equivalent nominal-dollar payment schedule and determining the equivalent nominal amortization schedule.

20. The method of claim 19 wherein said equivalent nominal-dollar interest rate r_t is calculated by using the following formula:

space="preserve" listing-type="equation">r.sub.t =(1+R.sub.t)·

(1+I.sub.t)-1;

space="preserve" listing-type="equation">for t=1, . . . ,y·

n;

where t is the adjustment period, I_t is a measure of inflation for the adjustment period t and R_t is the constant-dollar rate of return for adjustment period t.

21. The method of claim 19 wherein when the specified constant-dollar financial instrument has a number of payments per period equal to the number of adjustments per period, the nominal-dollar payment schedule is calculated according to the following formula:

##EQU7## where p_t is the equivalent nominal-dollar payment in adjustment period t;

P_t is the constant-dollar payment in adjustment period t;

I_i is the inflation rate in period i;

n is number of periods to maturity of the instrument; and

y equals the number of inflation adjustments per period.

22. The method of claim 19 wherein when the specified constant-dollar financial instrument is fully amortized over n periods with equal constant-dollar payments x times per period, and the number, y, of adjustments for inflation each period less than x, the equivalent nominal-dollar payment schedule is calculated by using the following formula:

##EQU8## where P_t *x/y-i+1, i=1, . . . ,x/y, are the x/y equal nominal-dollar payments in adjustment period t;

B_o is the original amount borrowed in constant-dollars;

R is the fixed constant-dollar rate of return;

I_j is the inflation rate for adjustment period j; and

r_t is the equivalent nominal-dollar rate of return for adjustment period t.

23. The method of claim 22 wherein the nominal-dollar amortization schedule is calculated by using the following formula:

space="preserve" listing-type="equation">b.sub.t =b.sub.t-1 (1+r.sub.t).sup.1/x -p.sub.t ;

space="preserve" listing-type="equation">for t=1, . . . ,x·

n;

where b_t is the scheduled nominal-dollar loan balance in period t;

r_t is the equivalent nominal-dollar interest rate in period t; and

p_t is the nominal-dollar loan payment in period t; and

b_t-1 is the nominal dollar loan balance for the previous period.

24. The method of claim 19 wherein when the specified constant-dollar financial instrument has a variable constant-dollar rate of return and a fixed constant-dollar amortization schedule, the step of calculating the equivalent nominal-dollar amortization schedule is performed before the step of converting the constant-dollar payment schedule into an equivalent nominal-dollar payment schedule.

25. The method of claim 24 wherein the equivalent nominal-dollar amortization schedule is calculated by using the following formula:

##EQU9## where b_t is the scheduled nominal-dollar loan balance for period t;

B_t is the scheduled constant-dollar loan balance for period t; and

I_i is the inflation rate for period i; and

x is the number of payments per period.

26. The method of claim 25 wherein the nominal-dollar payment schedule is calculated using the following formula:

space="preserve" listing-type="equation">P.sub.t =(1+r.sub.t).sup.1/x ·

b.sub.t-1 -b.sub.t ;

space="preserve" listing-type="equation">t=1, . . . , x·

n

where P_t is the nominal-dollar payment in period t;

r_t is the equivalent nominal-dollar rate of return in period t; and

b_t is the equivalent nominal-dollar loan balance in period t.

27. The method of claim 19 further comprising the steps of determining if the specified constant-dollar instrument has a fixed rate of return.

28. A method for converting a constant-dollar financial instrument into an equivalent nominal-dollar instrument comprising the steps of:

inputting input data to specify a constant-dollar financial instrument, including primary component data of the specified constant-dollar instrument, and a measure of inflation, base period and frequency of adjustment for inflation to be used, said primary component data comprising an interest rate or rate or return specification, said specification including the convention chosen to express the interest rate or rate of return;

storing in a first memory the input data entered through said input means;

comparing the form of the primary component data with a stored standard form, including comparing the input interest rate or rate of return specification with a stored standard convention for expressing the interest rate or rate of return;

converting any non-standard primary components into the standard form and defining a measure of inflation consistent with said standard convention utilizing the input measure of inflation and base period, said converting comprising the step of generating a constant-dollar payment schedule and a constant-dollar amortization schedule for the specified constant-dollar financial instrument;

converting the specified constant-dollar financial instrument into an equivalent nominal-dollar instrument by converting the standard form primary components of the instrument into equivalent nominal-dollar components based upon the defined measure of inflation; and

outputting output data relating to the equivalent nominal-dollar instrument, including said equivalent nominal-dollar components.

29. An apparatus for converting a constant-dollar financial instrument into an equivalent nominal-dollar instrument comprising:

input means for inputting input data to specify a constant-dollar financial instrument, including primary components of the specified constant-dollar financial instrument, and a measure of inflation, base period and frequency of adjustment for inflation to be used, said primary components comprising an interest rate or rate of return specification, said specification including the convention chosen to express the interest rate or rate of return;

first memory means for storing the input data entered through said input means;

second memory means for storing a standard form for the primary components of the specified constant-dollar financial instrument, including a standard convention for expressing the interest rate or rate or return;

comparison mean for comparing the form of the primary components entered through said input means with the stored standard form, including a comparison of the input interest rate or rate of return specification with said standard convention;

first converting means for converting any non-standard primary components of the instrument into said standard form and defining a measure of inflation consistent with said standard convention utilizing the input measure of inflation and base period;

second converting means for converting the specified constant-dollar financial instrument into an equivalent nominal-dollar instrument by converting the standard form primary components of the instrument into equivalent nominal dollar components based upon the defined measure of inflation;

output means for outputting output data relating to the equivalent nominal-dollar instrument, including said equivalent nominal dollar components; and

loan servicing means for servicing received loan payments and other transactions, comprising output means for outputting data comprising one or more of the following;

the current nominal-dollar return;

the current interest and penalties due;

the payment amount and the portion of the payment to be used for payment of current interest and penalties;

the change in the amount of accrued interest from the prior payment and the new level of accured interest;

the change in the outstanding loan balance from the prior payment period;

the current loan balance;

a list of any loan terms with which the loan is not currently in compliance, and supporting data therefor;

current financial data required to be supplied by the borrower;

the nominal-dollar return for the subsequent payment period; and

the required payment of the subsequent payment period.

30. A method for converting a constant-dollar financial instrument into an equivalent nominal-dollar instrument comprising the steps of:

inputting input data to specify a constant-dollar financial instrument, including primary component data of the specified constant-dollar instrument, and a measure of inflation, base period and frequency of adjustment for inflation to be used, said primary component data comprising an interest rate or rate of return specification, said specification including the convention chosen to express the interest rate or rate or return;

storing in a first memory the input data entered through said input means;

comparing the form of the primary component data with a stored standard form, including comparing the input interest rate or rate of return specification with a stored standard convention for expressing the interest rate or rate of return;

converting any non-standard primary components into the standard form and defining a measure of inflation consistent with said standard convention utilizing the input measure of inflation and base period;

converting the specified constant-dollar financial instrument into an equivalent nominal-dollar instrument by converting the standard form primary components of the instrument into equivalent nominal-dollar components based upon the defined measure of inflation; and

outputting output data relating to the equivalent nominal-dollar instrument, including said equivalent nominal-dollar components; and

servicing received payments and other transactions concerning the specified financial instrument, said servicing comprising the step of outputting servicing data comprising one or more of the following;

the current nominal-dollar return;

the current interest and penalties due;

the payment amount and the portion of the payment to be used for payment of current interest and penalties;

the change in the amount of accrued interest from the prior payment and the new level of accured interest;

the change in the outstanding loan balance from the prior payment period;

the current loan balance;

a list of any loan terms with which the loan is not currently in compliance, and supporting data therefor;

current financial data required to be supplied by the borrower;

the nominal-dollar return for the subsequent payment period; and

the required payment of the subsequent payment period.

31. An apparatus for servicing a constant-dollar financial instrument expressed in equivalent nominal dollar terms, comprising:

first memory means for storing data specifying in equivlent nominal dollar terms the constant dollar financial instrument, including nominal dollar equivalent specifications of the rate of return or rate of interest and at least one of a payment schedule and amortization schedule of the constant-dollar financial instrument, and a measure of inflation, base period and frequency of adjustment for inflation to be used; and

updating means for periodically updating current data of the instrument in nominal dollar terms, said updating means comprising;

input means for inputting actual transaction data relating to the instrument, including payment amounts and dates of receipt, and inflation measure data;

second memory means for storing the actual transaction data and inflation measure data input through said input means;

first calculating means for calculating a nominal dollar rate of interest or rate of return figure applicable for a subsequent inflation adjustment period, based on the nominal dollar equivalent specification of the rate of interest or rate of return stored in said first memory means, and inflation measure data for said subsequent inflation adjustment period stored in said second memory means;

second calculating means for calculating a scheduled payment amount for a subsequent payment period, based on the nominal dollar equivalent specifications of the instrument stored in said first memory means, and inflation measure data stored in said second memory means;

third memory means for storing the nominal dollar rate of interest or rate of return figure calculated by said first calculating means, the scheduled payment amount calculated by said second calculating means, and a total required nominal dollar payment amount for a previous payment period immediately preceding said subsequent payment period;

comparing means for comparing, respectively, the payment amounts and dates of receipt stored in said second memory means with the total required nominal dollar payment amount stored in said third memory means, and a scheduled payment date, for said previous payment period;

first determining means for determining any unpaid payment amount from said previous payment period, and penalties to be applied, based upon the comparison of said comparing means, said first determining means including means for checking penalty provisions of the instrument to determine said penalties to be applied, if any;

third calculating means for calculating a total required nominal dollar payment for the subsequent payment period by adding to the scheduled payment amount for that period stored in said third memory means any unpaid payment amounts and penalties determined by said first determining means; and

output means for outputting servicing data, including the nominal dollar rate of interest or rate of return applicable for said subsequent payment period, penalties applied from the previous payment period as determined by said first determining means, and the total required nominal dollar payment calculated by said third calculating means.

32. The apparatus of claim 31, wherein the data stored in said first memory means specifies in nominal dollar terms a rate of return or rate of interest of the constant dollar financial instrument as follows:

space="preserve" listing-type="equation">r.sub.t =(1+R.sub.t)·

(1+I.sub.t)-1;

space="preserve" listing-type="equation">for t=1, . . . , y"n;

where t is the inflation adjustment period, I_t is a measure of inflation for the adjustment period t and R_t is the constant-dollar rate of return or rate of interest for adjustment period t.

33. The apparatus of claim 31, wherein the data stored in said first memory means specifies in nominal dollar terms a constant dollar financial instrument having a number of payments per period equal to the number of inflation adjustments per period, and defines a nominal dollar payment schedule as follows:

##EQU10## where p_t is the equivalent nominal-dollar payment in inflation adjustment period t;

P_t is the constant-dollar payment in adjustment period t;

I_i is the inflation rate in adjustment period i;

n is the number of periods to maturity of the instrument; and

y equals the number of inflation adjustments per period.

34. The apparatus of claim 31, wherein the data stored in said first memory means specifies in nominal dollar terms a constant dollar financial instrument to be fully amortized over n periods with equal constant-dollar payments x times per period, the number, y, of adjustments for inflation each period being less than x, and defines a nominal dollar payment schedule as follows:

##EQU11## where P_t*x/y-i+1, i=1, . . . ,x/y, are the x/y equal nominal-dollar payments in adjustment period t;

B_o is the original amount borrowed in constant-dollars;

R is the fixed constant-dollar rate of return or rate of interest;

I_j is the inflation rate for period j; and

r_t is the equivalent nominal-dollar rate of return or rate of interest for adjustment period t.

35. The apparatus of claim 34, wherein the data stored in said first memory means further defines in nominal-dollar terms an amortization schedule of the constant-dollar financial instrument as follows:

space="preserve" listing-type="equation">b.sub.t =b.sub.t-1 (1+r.sub.t).sup.1/x -p.sub.t ;

space="preserve" listing-type="equation">for t=1, . . . ,x"n;

where b_t is the scheduled nominal-dollar loan balance in period t;

r_t is the equivalent nominal-dollar interest rate in period t;

p_t is the nominal-dollar loan payment in period t; and

b_t-1 is the nominal dollar loan balance for the previous period.

36. The apparatus of claim 33, wherein the data stored in said first memory means further defines in nominal-dollar terms an amortization schedule of the constant-dollar financial instrument as follows:

space="preserve" listing-type="equation">b.sub.t =b.sub.t-1 (1+r).sup.1/x p.sub.t ;

space="preserve" listing-type="equation">for t=1, . . . ,x"n;

where b_t is the scheduled nominal-dollar loan balance in period t;

r_t is the equivalent nominal-dollar interest rate in period t;

p_t is the nominal-dollar loan payment in period t; and

b_t-1 is the nominal dollar loan balance for the previous period.

37. The apparatus or claim 31, wherein the data stored in said first memory means specifies in nominal dollar terms a constant-dollar financial instrument having a variable constant-dollar rate of return or rate of interest and a fixed constant-dollar amortization schedule defined as follows:

##EQU12## where b_t is the scheduled nominal-dollar loan balance for period t;

B_t is the scheduled constant-dollar loan balance for period t;

I_i is the inflation rate for period i; and

x is the number of payments per period.

38. The apparatus of claim 37, wherein the data stored in said first memory means further defines a nominal dollar payment schedule of the constant-dollar financial instrument as follows:

space="preserve" listing-type="equation">P.sub.t =(1+r.sub.t).sup.1/x.b.sub.t-1 -b.sub.t ;

space="preserve" listing-type="equation">t=1, . . . ,x.n

where P_t is the nominal-dollar payment in period t;

r_t is the equivalent nominal dollar rate of return in period t; and

b_t is the equivalent nominal-dollar loan balance in period t.

39. The apparatus of claim 31, wherein the data stored in said first memory means specifies, in equivalent nominal dollar terms, terms and covenants of the constant-dollar financial instrument, said input means provides for input of term and covenant compliance data, said second memory means stores the term and covenant compliance data input through said input means, said comparison means compares the term and covenant compliance data stored in said second memory means with the terms and covenants stored in said first memory means, said determining means determines whether there is currently compliance with the terms and covenants of the financial instrument, based upon the comparison of said comparing means, and said output means outputs a list of any terms and covenants that have not been complied with.

40. The apparatus of claim 31, wherein:

the third calculating means calculates a current interest amount and the portion of a current payment that will go to pay the current interest amount and any penalties, a change in accrued interest from the previous payment period, a new level of accrued interest, a change in a loan balance from a previous period, and a new loan balance; and

the output means outputs the calculated current interest amount, the payment amount being utilized for payment of the current interest and any penalties, the change in the amount of accrued interest, the new level of accrued interest, the change in the loan balance, and the new loan balance.

41. The apparatus of claim 31, further comprising second determining means for determining whether the constant-dollar financial instrument specified in said first memory means has (1) a fixed constant-dollar rate of return or a variable constant-dollar rate of return with fixed constant-dollar payments, or (2) a variable constant-dollar rate of return and a fixed amortization schedule;

and wherein said second calculating means calculates the scheduled payment amount for the subsequent payment period;

utilizing a nominal dollar equivalent specification of a payment schedule stored in said first memory means when the second determining means determines that the constant-dollar financial instrument has a fixed constant-dollar rate of return or a variable constant dollar rate of return with fixed constant dollar payments; and

utilizing a nominal dollar equivalent specification of an amortization schedule stored in said first memory means when the second determining means determines that the constant-dollar financial instrument has a variable constant-dollar rate of return and a fixed amortization schedule.

42. A method for servicing with an automated data processing system a constant-dollar financial instrument expressed in equivalent nominal dollar terms, comprising the steps of:

providing a memory storing data specifying in equivalent nominal dollar terms the constant dollar financial instrument, including nominal dollar equivalent specifications of the rate of return or rate of interest and at least one of a payment schedule and amortization schedule of the constant-dollar financial instrument, and a measure of inflation, base period and frequency of adjustment for inflation to be used; and

periodically updating current data of the instrument in nominal dollar terms, said updating comprising the steps of;

inputting actual transaction data relating to the instrument, including payment amounts and dates of receipt, and inflation measure data;

storing the input actual transaction data and inflation measure data;

calculating a nominal dollar rate of interest or rate of return figure applicable for a subsequent inflation adjustment period, based on the stored nominal dollar equivalent specification of the rate of interest or rate of return, and stored inflation measure data for said subsequent inflation adjustment period;

calculating a scheduled payment amount for a subsequent payment period, based on the stored nominal dollar equivalent specifications of the instrument, and stored inflation measure data;

storing the calculated nominal dollar rate of interest or rate of return figure, the calculated scheduled payment amount, and a total required nominal dollar payment amount for a previous payment period immediately preceding said subsequent payment period;

comparing, respectively, the stored payment amounts and dates of receipt with the stored total required nominal dollar payment amount, and a scheduled payment date, for said previous payment period;

determining any unpaid payment amount from said previous payment period, and penalties to be applied, based upon the result of the comparing step, said determining step including the step of checking penalty provisions of the instrument to determine said penalties to be applied, if any;

calculating a total required nominal dollar payment for the subsequent payment period by adding to the stored scheduled payment amount for that period any unpaid payment amounts and penalties determined in the determining step; and

outputting servicing data, including the nominal dollar rate of interest or rate of return applicable for said subsequent payment period, penalties applied from the previous payment period as determined in the determining step, and the calculated total required nominal dollar payment for the subsequent payment period.

43. The method of claim 42, wherein the data stored in said memory specifies in nominal dollar terms a rate of return or rate of interest of the constant dollar financial instrument as follows:

space="preserve" listing-type="equation">r.sub.t =(1+R.sub.t)·

(1+I.sub.t)-1;

space="preserve" listing-type="equation">for t=1, . . . ,y"n;

where t is the inflation adjustment period, I_t is a measure of inflation for the adjustment period t and R_t is the constant-dollar rate of return or rate of interest for adjustment period t.

44. The method of claim 42, wherein the data stored in said memory specifies in nominal dollar terms a constant dollar financial instrument having a number of payments per period equal to the number of inflation adjustments per period, and defines a nominal dollar payment schedule as follows:

##EQU13## where p_t is the equivalent nominal-dollar payment in inflation adjustment period t;

P_t is the constant-dollar payment in adjustment period t;

I_i is the inflation rate in adjustment period i;

n is the number of periods to maturity of the instrument; and

y equals the number of inflation adjustments per period.

45. The method of claim 42, wherein the data stored in said memory specifies in nominal dollar terms a constant dollar financial instrument to be fully amortized over n periods with equal constant-dollar payments x times per period, the number, y, of adjustments for inflation each period being less than x, and defines a nominal dollar payment schedule as follows:

##EQU14## where P_t*x/y-i+1, i=1, . . . , x/y, are the x/y equal nominal-dollar payments in adjustment period t;

B_o is the original amount borrowed in constant-dollars;

R is the fixed constant-dollar rate of return or rate of interest;

I_j is the inflation rate for period j; and

r_t is the equivalent nominal-dollar rate of return or rate of interest for adjustment period t.

46. The method of claim 45, wherein the data stored in said memory further defines in nominal-dollar terms an amortization schedule of the constant-dollar financial instrument as follows:

space="preserve" listing-type="equation">b.sub.t =b.sub.t-1 (1+r.sub.t).sup.1/x -p.sub.t ;

space="preserve" listing-type="equation">for t=1, . . . , x"n;

where b_t is the scheduled nominal-dollar loan balance in period t;

r_t is the equivalent nominal-dollar interest rate in period t;

p_t is the nominal-dollar loan payment in period t; and

b_t-1 is the nominal dollar loan balance for the previous period.

47. The method of claim 44, wherein the data stored in said memory further defines in nominal-dollar terms an amortization schedule of the constant-dollar financial instrument as follows:

space="preserve" listing-type="equation">b.sub.t =b.sub.t-1 (1+r).sup.1/x -p.sub.t ;

space="preserve" listing-type="equation">for t=1, . . . , x"n;

where b_t is the scheduled nominal-dollar loan balance in period t;

r_t is the equivalent nominal-dollar interest rate in period t;

p_t is the nominal-dollar loan payment in period t; and

b_t-1 is the nominal dollar loan balance for the previous period.

48. The method of claim 42, wherein the data stored in said memory specifies in nominal dollar terms a constant-dollar financial instrument having a variable constant-dollar rate of return or rate of interest and a fixed constant-dollar amortization schedule defined as follows:

##EQU15## where b_t is the scheduled nominal-dollar loan balance for period t;

B_t is the scheduled constant-dollar loan balance for period t;

I_i is the inflation rate for period i; and

x is the number of payments per period.

49. The method of claim 48, wherein the data stored in said memory further defines a nominal dollar payment schedule of the constant-dollar financial instrument as follows:

space="preserve" listing-type="equation">P.sub.t =(1+r.sub.t).sup.1/x ·

b.sub.t-1 -b.sub.t ;

space="preserve" listing-type="equation">t=1, . . . ,x·

n

where P_t is the nominal-dollar payment in period t;

r_t is the equivalent nominal dollar rate of return in period t; and

b_t is the equivalent nominal-dollar loan balance in period t.

50. The method of claim 42, wherein the data stored in said memory specifies, in equivalent nominal dollar terms, terms and covenants of the constant-dollar financial instrument, and said updating further includes the steps of inputting terms and convenant compliance data, storing the input term and covenant compliance data, comparing the stored term and covenant compliance data with the terms and covenants stored in said memory, determining whether there is currently compliance with the terms and covenants of the financial instrument, based upon the comparing step, and outputting a list of any terms and covenants that have not been complied with.

51. The method of claim 42, wherein said updating step further comprising the steps of:

calculating a current interest amount and the portion of a current payment that will go to pay the current interest amount and any penalties, a change in accrued interest from the previous payment period, a new level of accrued interest, a change in a loan balance from a previous period, and a new loan balance; and

outputting the calculated current interest amount, the payment amount being utilized for payment of the current interest and any penalties, the change in the amount of accrued interest, the new level of accrued interest, the change in the loan balance, and the new loan balance.

52. The method of claim 42, wherein said updating step further comprises the steps of determining whether the constant-dollar financial instrument specified in said memory has (1) a fixed constant-dollar rate of return or a variable constant-dollar rate of return with fixed constant-dollar payments, or (2) a variable constant-dollar rate of return and a fixed amortization schedule;

and calculating the scheduled payment amount for the subsequent payment period;

utilizing a nominal dollar equivalent specification of a payment schedule stored in said memory when it is determined that the constant-dollar financial instrument has a fixed constant-dollar rate of return or a variable constant dollar rate of return with fixed constant dollar payments; and

utilizing a nominal dollar equivalent specification of an amortization schedule stored in said memory when it is determined that the constant-dollar financial instrument has a variable constant-dollar rate of return and a fixed amortization schedule.