Your Email:

Subject:

Message:
Entry: Faith-Based Economy Link: http://www.takimag.com/blogs/article/faith_based_economy#20738 Post contents: @ John Médaille No problem, John. "<a href="http://en.wikipedia.org/wiki/Notional_amount">Notional</a>" in this context is a face amount that is used to calculate payments. Nobody bears the notional risk; that is why these instruments are called derivatives. Notional is just an arbitrary number that is used to calculate amount of payments over time. If you default on the payments, you don't get sued for the notional; you get sued for the payments you owe, which are typically some small fraction of the notional. Sent at: 2008 07 24