principal

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.

Notes:

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 can be referred to as "corpus."

See also: Agent, Bond, Broker-Dealer, Dealer, Face Value

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Principal

(1) The total amount of money being borrowed or lent. (2) The party affected by agent decisions in a principal-agent relationship.

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principal

1. The face amount of a bond. Once a bond has been issued, it may sell at more or less than its principal amount, depending upon changes in interest rates and the riskiness of the security. At maturity, however, the bond will be redeemed for its principal amount. Also called principal amount.

2. Funds put up by an investor.

3. The person who owns or takes delivery of an asset in a trade. For example, an investor is the principal for whom a broker executes a trade.