In an interest rate swap,the notional principal:
A) is the principal relating only to the fixed rate payer.
B) is the principal relating only to the floating rate payer.
C) does not receive any interest payments.
D) is equal to the amount of the underlying debt borrowed.

Question

Quizplus · Accepted Answer

In an interest rate swap, the notional principal is the amount used to calculate the interest rate payments. It does not represent an actual principal amount borrowed, but rather serves as a reference point for the calculation of interest payments. Therefore, it is typically equal to the amount of the underlying debt borrowed.

In an Interest Rate Swap,the Notional Principal