Notional principal: Difference between revisions
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imported>Doug Williamson m (Added space before see also) |
imported>Doug Williamson (Clarify that the notional amount is not itself exchanged, and link with Nominal page.) |
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The amount of notional principal would commonly be set equal to the principal amount of any underlying exposure being hedged. | The amount of notional principal would commonly be set equal to the principal amount of any underlying exposure being hedged. | ||
The notional amount itself is not exchanged. | |||
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* [[Forward rate agreement]] | * [[Forward rate agreement]] | ||
* [[Swap]] | * [[Swap]] | ||
* [[Nominal]] | |||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
[[Category:Risk_frameworks]] | [[Category:Risk_frameworks]] | ||
Revision as of 14:37, 24 March 2015
Notional principal is the base amount on which the settlement of a derivative instrument - such as an Forward Rate Agreement (FRA) or a swap - is calculated.
The amount of notional principal would commonly be set equal to the principal amount of any underlying exposure being hedged.
The notional amount itself is not exchanged.
