What is "notional amount"

n. (context finance English) A nominal amount of a financial instrument that is used to calculate payments made on that instrument, especially for instruments that do not have a well-defined face value or par value.

The notional amount (or notional principal amount or notional value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change and is thus referred to as notional.