this bugs me. yet another topic mentioned in 4 different readings. if principal in a swap is exchanged at start and end, is it really “notional”? isn’t it “the principal”? minor nitty, i know… but it just drives me up the wall. and at least one reading says, “because it’s not exchanged at initiation (and presumably maturity), it’s notional”… and others say the opposite… so nit-picky i know.
I would say Notional if there is no exchange.
I think they go from the general definition. you can have a swap with principal exchanged or not. either way it is notional principal. in the case in which it is exchanged I guess it’s nominal and actual
i googled notional principal, and it did just sort of say principal. might have look up notional too. but at least one reading says that is isn’t exchanged (i.e. that’s what notional is). and that’s my first thought. but i will go with it being exchanged.
oops, from wikipedia. The notional amount (or notional principal amount or notional value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change hands and is thus referred to as notional. Contents [hide] it’s bad enough to learn 600 separate things, but then all the inconsistencies. ugh!!