Amount of money involved in swap transaction is classified as

A. notion principal

B. swap principal

C. transaction principal

D. time value of swap

Answer: Option A

Solution(By Examveda Team)

Amount of money involved in swap transaction is classified as notion principal. The notional principal amount, in an interest rate swap, is the predetermined dollar amounts, or principal, 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.