Notional value, in the context of derivatives, serves as a metric to represent the total value of what the derivative contract is based on, or its underlying asset. For instance, in a futures contract or swap agreement, the notional amount describes the quantity, oftentimes denominated in monetary terms, upon which the financial contract's terms are predicated without actually being exchanged. This concept is pivotal, particularly in relation to expressions of derivative-related risks, profitability metrics, and capital requirements. For example, in a foreign exchange forward, the notional value might denote the currency amount against which values are swapped between the participants. Understanding the notional amount is crucial for accounting for derivatives accurately and effectively assessing financial exposures.