Notional principal: Difference between revisions
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imported>Doug Williamson (Add alternative names. Source: The Treasurer, December 2019, p11.) |
imported>Doug Williamson (Links ordering.) |
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* [[Derivative instrument]] | * [[Derivative instrument]] | ||
* [[Forward rate agreement]] | * [[Forward rate agreement]] | ||
* [[Nominal]] | * [[Nominal]] | ||
* [[Nominal value]] | * [[Nominal value]] | ||
* [[Swap]] | |||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
[[Category:Risk_frameworks]] | [[Category:Risk_frameworks]] | ||
Revision as of 16:24, 25 June 2022
(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.
Notional principal is also known as the notional amount, or notional value.
