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Notional Meaning: Definition and Examples

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notional

[ˈnoʊʃənl ]

Definitions

Context #1 | Adjective

general use

Notional refers to something that exists in thought or as an idea but not as a tangible or physical entity. It often implies a theoretical concept rather than a practical application.

Synonyms

abstract, conceptual, theoretical.

Examples of usage

  • The notional value of the asset is significantly higher than its market price.
  • In financial terms, notional amounts are often used to calculate exposure.
  • The project has a notional scope, which outlines broad objectives.
Context #2 | Adjective

finance

In finance, notional refers to the total value of a leveraged position's assets, commonly used in futures and derivatives markets to denote the scale of exposure.

Synonyms

calculated, imagined, nominal.

Examples of usage

  • The notional amount is crucial for understanding the total risk involved in the transaction.
  • She invested a notional sum in the derivatives market.
  • Understanding the notional exposure can help in managing financial risks.

Interesting Facts

Philosophy

  • In philosophy, notional concepts help people to understand abstract ideas that can't be directly observed.
  • Philosophers often debate the difference between notional and real concepts, impacting theories of knowledge and existence.
  • The notional vs. actual distinction is crucial in discussions about theories of truth and reference in language.

Economics

  • In finance, a notional amount represents a value used for calculations to understand the worth of financial instruments without actual cash changing hands.
  • Notional values are used in derivatives trading to assess market risks and leverage without physical exchanges.
  • Understanding notional amounts can help investors grasp the scale and implications of financial transactions.

Linguistics

  • In language studies, notional meanings help identify how words can represent concepts that may not have a direct physical counterpart.
  • Linguists explore how notional categories influence our understanding of tense, aspect, and modality in languages.
  • The study of notional attributes can provide insights into how language shapes our perception of reality.

Cognitive Science

  • Cognitive scientists study how humans form notional ideas, which can affect memory, behavior, and perception.
  • Understanding notional thinking could contribute to fields like artificial intelligence, particularly in simulating human conceptualization processes.
  • The distinction between notional thinking and concrete action is essential in psychology, influencing decision-making theories.

Origin of 'notional'

Main points about word origin

  • Derived from the Latin word 'notio,' meaning 'a making known' or 'a notion,' emphasizing the root idea of concepts.
  • The term began to gain prominence in the English language during the late 19th century, reflecting shifts in academic language.
  • It is commonly used in philosophy and economics, highlighting how ideas can influence understanding and decision-making.

The term 'notional' originates from the Latin word 'notio,' which means 'a notion or idea.' It evolved through Middle English, where it was used to describe concepts that exist in thought. The prefix 'not-' relates to knowing or recognizing, emphasizing the intellectual aspect of notions. By the late 19th century, it started to gain specific usage in finance, where it described values not necessarily tied to physical assets but representing theoretical values that could influence real-world transactions. This dual usage reflects our evolving understanding of concepts and their practical implications in various fields.

Word Frequency Rank

Positioned at #20,958, this word is part of extensive vocabulary. It's relatively rare in general usage but may be important in specific fields or formal writing.