The notional value and market value describe the amount of a security. The notional value is the total value of options, forwards, futures and foreign exchange currencies. The market value is the price of a security in the marketplace.
Notional Value
The notional value is the total amount of a security's underlying asset at its spot price. The notional value distinguishes between the amount of money invested and the amount associated with the whole transaction. The notional value is calculated by multiplying the units in one contract by the spot price.
For example, assume an investor wants to buy one gold futures contract. The futures contract costs the buyer 100 troy ounces of gold. If gold futures are trading at $1,100, then one gold futures contract has a notional value of $110,000.
Market Value
On the other hand, the market value is the price of a security that buyers and sellers agree on in the marketplace. The security's market value is calculated by determining the security's supply and demand. Unlike the notional value, which determines the total value of a security based on its contract specification, the market value is the price of one unit of the security.
For example, assume that the S&P 500 Index futures are trading at $2,000. The market value of one unit of the S&P 500 Index is $2,000. Conversely, the notional value of one S&P Index futures contract is $500,000 ($2,000*250) because one S&P Index futures contract leverages 250 units of the index.
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Notional Value
The total value of a leveraged position's assets. This term is ... -
Notional Principal Amount
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Amortizing Swap
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Fixed Price
The leg of a swap that is based on an unchanging interest rate. ... -
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The leg of a swap that is based on a fluctuating interest rate. ... -
Airbag Swap
An interest rate swap whose notional value adjusts according ...