Definition

Notional principal: The principal used to calculate payments in an interest rate swap. The principal is 'notional' because it's neither paid nor received.

Systematic risk: The risk which cannot be diversified away.

Maximum Likelihood Method: A method of choosing the values of the parameters by maximising the probability of a set of observations occurring.

Monetary policy: Monetary Policy is a central bank process of managing money supply to achieve specific goals, such as constraining inflation, maintaining exchange rate, achieving full employment  or economic growth. Monetary policy can involve changing interest rate directly or indirectly through open market operations, setting reserve requirements, or trading in foreign exchange markets.