Notional principal: Difference between revisions
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imported>Doug Williamson (Clarify that the notional amount is not itself exchanged, and link with Nominal page.) |
imported>Doug Williamson (Add link.) |
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* [[Swap]] | * [[Swap]] | ||
* [[Nominal]] | * [[Nominal]] | ||
* [[Nominal value]] | |||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
[[Category:Risk_frameworks]] | [[Category:Risk_frameworks]] | ||
Revision as of 09:52, 16 July 2016
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.
