Build a valuation model from live yield curves

Why use this

1. A discounted-cash-flow model can use a current-looking rate while applying the wrong currency, maturity convention or observation date. Changes in the yield curve also need to stay separate from changes in operating assumptions so reviewers can understand what moved the result.

2. This job could prepare a transparent valuation model with a dated input trail and sensitivity review. A finance professional could then examine the chosen discounting approach rather than accepting market-data freshness as proof that the valuation is appropriate.

Why an agent / simpler alternative

Useful judgment

Reconcile market-data fields with model assumptions and explain source or tenor mismatches.

Simpler alternative

Refresh an approved model’s rate inputs manually when the mapping is stable and limited.

Unsuitable when

The task requires investment advice, trading or an unsupported valuation-method decision.

Proposed inputs

1. Name

   Cash-flow and model specification

   Owner

   Finance owner

   Minimum scope

   Approved projections, currency, valuation date and discounting method

   Quality check

   Identify nominal versus real values and timing conventions.

2. Name

   Entitled yield data

   Owner

   Data owner

   Minimum scope

   Authorized curve observations, tenors, units and timestamps

   Quality check

   Confirm entitlement and distinguish spot, par or forward rates.

Access and setup — proposed or unknown

Proposed minimum

1. Use approved data exports and a separate model copy with an input provenance sheet.

Compatibility unknowns

1. Unknown: LSEG entitlement, field definitions, curve coverage and spreadsheet compatibility.

External actions requiring approval

1. Purchasing data, sharing licensed observations or changing financial accounts.

Expected deliverable and review checks

Proposed artifact

Reviewable model draft with curve mapping, assumptions, sensitivities and unresolved methodology questions.

Critical checks

1. Rate units and compounding align with cash-flow timing.

2. Stale or missing tenors are labelled rather than silently interpolated without an approved rule.

Missing output evidence

No new run or output inspection in this editorial layer; see linked source-specific limits.

Failure signals and proposed responses

1. Signal

   A percentage rate is entered as a whole-number multiplier.

   Why it matters

   The valuation can be materially distorted despite a valid source quote.

   Proposed response

   Check units and use a simple independent sanity calculation before interpretation.

2. Signal

   The curve currency differs from the projected cash flows.

   Why it matters

   The discounting basis may be economically inconsistent.

   Proposed response

   Hold the calculation and ask the reviewer to approve an appropriate currency-consistent approach.

Effort and cost — unknown

Setup work

1. Map curve fields and document discounting conventions.

Ongoing review

1. Reconcile refreshed observations and review sensitivity to assumptions.

Unknowns

1. Unknown: data costs, model-review effort and valuation uncertainty.

First check — proposed, unexecuted

Status

proposed_unexecuted

Synthetic fixture

Synthetic inputs include a rate-unit mismatch and cash flows denominated differently from the supplied curve.

Acceptance checks

1. Both issues are identified before a value is interpreted.

2. No replacement rate or methodology is invented.

Stop conditions

1. Entitlement, currency basis or a material financial assumption is unresolved.

Limits

1. Market-informed inputs do not establish fair value; the model remains conditional on assumptions and professional judgment.