validated against other source of price data. In addition, Aareal Bank's analysis takes into account factors such as tranche-specific collateralisation status and collateral structures; analyses of underlying receiv- ables ("look-through" analysis of ABS), primarily regarding redemption schedules and (payment) defaults of securitised receivables; as well as trigger events and rating changes. The fair value of over-the-counter (OTC) derivatives is determined using valuation methods that are commonly accepted in the financial markets, such as the present value technique and option pricing models. The fair value of foreign exchange forwards is generally based on current forward exchange rates. Structured interest rate transactions are measured using appropriate option pricing models or numerical procedures. The measurement model used for options included in the transaction is the commonly used Black-Scholes model, or appropriate numerical procedures. Price data and parameters used in the measurement procedures applied are generally reviewed carefully and adjusted, if necessary ­ particularly in view of the current market developments. In case the fair value of unlisted equity instruments cannot be determined reliably, the instruments are accounted for using amortised cost. The fair value for loans and advances as well as liabilities to banks and customers are determined using a present value model on the basis of contractually agreed cash flows, taking into account credit quality, liquidity and costs. The fair values of contingent liabilities and irrevocable loan commitments correspond to their carrying amounts. 160 Aareal Bank Group ­ Annual Report 2008 | Consolidated Financial Statements | Notes