notional principal

Definition of "notional principal"
  1. The hypothetical amount that is used in a derivative contract to calculate periodic payment responsibilities such as in an interest rate swap or forward rate agreement
How to use "notional principal" in a sentence
  1. The notional principal in their currency swap agreement was set at a million dollars.
  2. The interest rate was applied to the notional principal to determine payment obligations.
  3. The derivative contract's conditions were established based on a notional principal.

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