The underlying amount of money on which the swap payments are made is called
A)settlement value
B)market value
C)notional amount
D)base value
E)equity value

Question

Quizplus · Accepted Answer

The notional amount represents the underlying amount on which the swap payments are based, but it is not exchanged between the parties involved in the swap. It is simply used as a reference for calculating the payments. The settlement value and the market value can fluctuate and change throughout the life of the swap, whereas the notional amount remains constant. The base value and equity value are not commonly used terms in the context of swaps.

The Underlying Amount of Money on Which the Swap Payments