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What is the meaning of the term National Principal in the case of swap transactions?

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posted Jul 4 by Diya Borda

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The national principal amount, in an interest rate swap, is the predetermined dollar amounts 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.

answer Jul 4 by Debolina Charaborthy
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