NPCs involve two parties who agree contractually to pay each other amounts at specified times, based on the underlying notional amount. The simplest example of an NPC is a so-called interest rate swap, in which one party (Party A) pays the other party (Party B) an amount each quarter determined by multiplying a floating, market-determined interest rate (e.g., LIBOR) by the notional amount; and Party B pays Party A on the same date an amount determined by multiplying a fixed interest rate by the notional amount.
NPCs involve two parties who agree contractually to pay each other amounts at predetermined times, based on a fundamental agreement. The most straightforward example of an NPC is an interest rate swap, where one party (Party A) pays another party (Party B) a sum every quarter calculated by multiplying a floating interest rate (e.g., LIBOR) by the agreed-upon amount; and Party B pays Party A on the same date a sum determined by multiplying a fixed interest rate by the agreed-upon amount.