Notional Principal
/ˈnoʊʃənəl ˈprɪnsəpəl/
Definitions
- (n.) A hypothetical amount used as a reference in financial contracts to calculate payments, without the amount being actually exchanged.
The interest payments were calculated based on the notional principal specified in the swap agreement.
Forms
- notional principal
- notional principals
Related terms
See also
Commentary
The notional principal serves solely as a calculation basis in derivatives and does not represent an actual loan or capital exchange.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.