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LINK / CITE ADD TO WORD LIST. noun. The definition of a notion is an idea, belief or vague knowledge of something. 1  An example of a notion is when you have an idea of what acceptable behavior is. 2  An example of a notion is when you sort of remember hearing about a particular fact.INK / CITE ADD TO WORD LIST. noun. The definition of a notion is an idea, belief or vague knowledge of something. 1  An example of a notion is when you have an idea of what acceptable behavior is. 2  An example of a notion is when you sort of remember hearing about a particular fact.
The notional principal amount, in an interest rate swap, is the predetermined dollar amounts on which the exchanged interest payments are based. The notional principal never changes hands in the transaction, which is why it is considered notional, or theoretical.