What is nominal value of a hedging relationship in SAP FS-BA-PM-AFP - Accounting for Financial Products?

SAP Term: nominal value of a hedging relationship

• Component: FS-BA-PM-AFP

• Component Name: Accounting for Financial Products

• Description: The total of the nominal values of hedge transactions, or the portions of them that are used in the hedging relationship for hedging the underlying transaction.

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• Key Concepts: 
  The nominal value of a hedging relationship is the total amount of the hedging instrument that is used to hedge a particular risk. This value is determined by the amount of the underlying asset or liability that is being hedged, as well as the terms of the hedging instrument. 
  
  How to use it: 
  In SAP, the nominal value of a hedging relationship is used to calculate the hedge effectiveness of a particular hedging instrument. The nominal value is used to determine the amount of risk that is being hedged and to calculate the hedge effectiveness ratio. 
  
  Tips & Tricks: 
  When calculating the nominal value of a hedging relationship, it is important to consider both the amount of the underlying asset or liability that is being hedged and the terms of the hedging instrument. This will ensure that you are accurately calculating the hedge effectiveness ratio. 
  
  Related Information: 
  The FS-BA-PM-AFP Accounting for Financial Products module in SAP provides users with tools to manage their financial products and derivatives. This module also provides users with tools to calculate hedge effectiveness ratios and manage their hedging relationships.