Definition, What is Notional Value, Advantages of ... - ClearTax

Notional value refers to the nominal or face value of a financial instrument, on which payments are calculated. This value is referred to as notional, ... BlackVersion0 Products IT IncomeTaxFiling FileIncometaxreturnsforfreein7minutes EX ExpertAssistedServices Getexperthelpfortaxfilingorstartingyourbusiness 80c New TaxSaving CuratedMutualFunds&plansfortaxsavings MF New MutualfundInvestments InvestinbestGrowthmutualfunds GST GSTSoftware CompleteGSTfiling&billingsolution TC TaxCloud(DirectTaxSoftware) I-T,e-TDS&AuditSoftwareforCAs&TaxProfessionals EINV e-InvoicingSoftware Completesolutionforallyoure-invoicingneeds Aboutus HelpCenter IncomeTax GST e-Invoicing MutualFunds Business LogIn Wheredoyouwanttologin? IncomeTaxE-Filing GSTSoftware MutualFunds SignUp SignUp SignUp LogIn IncomeTaxE-Filing GSTSoftware MutualFunds Products IT IncomeTaxFiling EX ExpertAssistedServices 80c TaxSaving MF MutualFundInvestments GST GSTSoftware TC TaxCloud(DirectTaxSoftware) NeedHelp? Aboutus FileITR,invest&saveupto₹46,800intaxesonthego 0%commission•Earn upto1.5%extrareturns Getdownloadlink Downloadlinksent Forandroid&IOSusers Glossary Trending home Trading TradingSkills&Essentials NotionalValue Category Trading Subcategories NotionalValue ReviewedbyAthena|UpdatedonMar11,2022 Share Catalogue WhatisNotionalValue? Notionalvaluereferstothenominalorfacevalueofafinancialinstrument,onwhichpaymentsarecalculated.Thisvalueisreferredtoasnotional,ornominalinsomecasesbecauseitdoesnotchange.Itisoftenusedtovaluetheunderlyingasset,inaderivativescontract. DifferenceBetweenNotionalValueandMarketValue Notionalvalueisthetheoreticvalueofhowmuchasecuritycontrols.Itisusuallyhigherthanthemarketvalue.Notionalvalueisusedinequityoptionsandcurrencyswaps.Itisusedtocalculatethevalueonwhichinterestratepaymentswillbeexchanged.Thenotionalvalueisalsousefulinassessingportfoliorisk. Marketvaluereferstothepriceatwhichsecuritiescanbeboughtandsold.Itistheactualvalueofasecurityatthecurrentmomentinamarketplace.Marketvalueisalsousedtocalculatethemarketcapitalisationofacompany.Thisvaluecanbecomputedbymultiplyingthecurrentshareprice,i.e.themarketpriceofashare,bythenumberofoutstandingshares. MoreAboutNotionalValuesBeingUsed EquityOptions Notionalvalueinequityoptionsisthevaluethattheoptioncontrols.Inastockoptioncontract,thenotionalvalueisthevalueofwhatyoucontrol,ratherthanwhatyouown. InterestRateSwaps Incurrencyswaps,itisusedtocalculatethevalueonwhichinterestratepaymentswillbeexchanged.This,inturn,willgivetheinvestortheamountofinterestdue. TotalReturnSwaps Underatotalreturnswap,onepartypaystheotherpartyafixedorfloatingrateofinterest,whichismultipliedbyanotionalprincipalamountplusdepreciation.Thisisswappedwithapartywhopaystheappreciationofthenotionalvalue. RelatedTerms RecentTerms FileGSTReturnswithClearTax Easy-to-use&100%accurateSoftware Auto-computeGSTR-9 Reconcilefiledreturnswithsalesandpurchase SingleclickuploaddatathroughTallyconnector Start30daysfreetrial Trustedby 4million CAAssisted Services Yourdatais safe&private TaxSavingInvestmentMadeSimple OnlyBestFundsPickedbyExperts CompletelyFREE&SimpletoInvest Highestreturnsamong80C Savetaxesupto₹46,800 SaveTax GrowWealth Trustedby 4million CAAssisted Services Yourdatais safe&private #