DEFINITION of 'Principal'

1. The amount borrowed or the amount still owed on a loan, separate from interest.

2. The original amount invested, separate from earnings.

3. The face value of a bond.

4. The owner of a private company.

5. The main party to a transaction, acting as either a buyer or seller for his/her own account and risk.


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Be sure to take into account the context in which this term is used, as the exact meaning of the term has many variations.

Also referred to as "corpus."

  1. Principal-Agent Relationship

    An arrangement in which one entity legally appoints another to ...
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    The owner of a government or corporate bond. Being a bondholder ...
  3. Agent

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  4. Agency Costs

    A type of internal cost that arises from, or must be paid to, ...
  5. Face Value

    The nominal value or dollar value of a security stated by the ...
  6. Funding Agreement

    A low-risk, fixed-income investment. A funding agreement offers ...
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  1. What are the responsibilities of the principal in a company?

    Principals have different roles depending on the nature of an individual business, but the universal responsibility of a ... Read Full Answer >>
  2. What formula can I use to calculate interest on interest?

    Use the compound interest formula to determine the amount of accumulated interest on the principal amount invested or borrowed. ... Read Full Answer >>
  3. What are the advantages of investing in a callable bond?

    The biggest advantage of investing in callable bonds is that the issuer almost always offers a higher interest rate than ... Read Full Answer >>
  4. Under what circumstances might an issuer redeem a callable bond?

    The primary circumstance under which a bond issuer redeems a callable bond is a drop in interest rates. When rates fall, ... Read Full Answer >>
  5. What are the most popular leveraged ETFs that track the electronics sector?

    No leveraged ETF tracks the entire electronics sector. However, some leveraged ETFs track the semiconductors group. Semiconductors ... Read Full Answer >>
  6. Where can I find a good compound interest calculator free on the Internet?

    A number of free online compound interest calculators are offered online. One of the best is available through Pine Grove ... Read Full Answer >>
  7. How do I calculate compound interest using Excel?

    In simple terms, compound interest is interest on interest. It is the interest that accumulates on the principal deposit. ... Read Full Answer >>
  8. What are the pros and cons of a simple-interest mortgage?

    The basic disadvantage of a simple interest mortgage lies in the fact that unless the borrower conscientiously makes all ... Read Full Answer >>
  9. Is there any time I would want to have a zero-principal mortgage?

    As a general rule, entering a zero principal mortgage, or what is commonly referred to as an "interest-only mortgage", is ... Read Full Answer >>
  10. What does it mean when a bond has a put option?

    A put option on a bond is a provision that allows the holder of the bond the right to force the issuer to pay back the principal ... Read Full Answer >>

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