Derivatives
Electricity Forward
June 24, 2022
Economics
Bootstrap Capitalism
June 24, 2022

The face value of a swap is its notional principal amount; it is the nominal value that is used as a basis for calculating swap payments. A respective period’s rate (resetting rates for resetting periods) is multiplied by the notional amount to determine the amount of payment that a counterparty has to make to the other.

The face value of a swap never changes hands in a transaction, as it is only used for payment calculation.

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