Notional principal: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Add link.) |
imported>Doug Williamson (Add abbreviation.) |
||
| Line 1: | Line 1: | ||
(NP). | |||
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. | 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. | ||
Revision as of 13:46, 6 September 2016
(NP).
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.
