A fictional amount on which the payments of the parties to a derivatives contract are based, usually used in the context of swaps, such as interest rate swaps or credit default swaps (CDS). The amount is "notional" because there is no actual exchange of principal amounts under the contract. Rather, the number is used solely for purposes of calculating the parties' payment obligations under the contract. See, for example, Finance Fundamentals: Deconstructing Derivatives: Basic (Plain Vanilla) Interest Rate Swap.