Principal

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.

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Principal. Principal can refer to an amount of money you invest, the face amount of a bond, or the balance you owe on a debt, distinct from the finance charges you pay to borrow.

A principal is also a person for whom a broker carries out a trade, or a person who executes a trade on his or her own behalf.