news | May 05, 2026

Notional principal - How To Discuss

Notional principal,

Definition of Notional principal:

  1. In interest rate swap transactions, the amount of principal of the underlying debt security. When this principal is separated from the obligation to pay interest, it becomes the notional or fictitious principal that generates the cash flow traded in the swap arrangement. Also called notional amount.

Meaning of Notional principal & Notional principal Definition