In the swap market,the reference amount against which the interest is calculated is known as the
A)notional principal
B)basis amount
C)arbitrage principal
D)swap differential

Question

Quizplus · Accepted Answer

The notional principal is the reference amount against which the interest is calculated in a swap contract. It is the basis on which the cash flows of the swap are determined. The notional principal does not change hands and is only used to calculate the interest payments. Therefore, option A is the correct answer. Options B, C, and D are not relevant to the concept of notional principal in a swap agreement.

In the Swap Market,the Reference Amount Against Which the Interest