Question Details

	Username: LuckyMan Rating: Asked to: Goro Yang Date Created: 13 Oct 2018
Category	28
Tag	Financial
Question	What is the 'Notional Principal Amount'?

Advice from Guru

Hi LuckyMan,

The notional principal amount, in an interest rate swap, is the predetermined dollar amounts, or principal, on which the exchanged interest payments are based. The notional principal never changes hands in the transaction, which is why it is considered notional, or theoretical. Neither party pays nor receives the notional principal amount at any time; only interest rate payments change hands.

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