debt (redirected from principal sum)

Debt

Money borrowed.

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debt

See liability.

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Debt

Any money owed to an individual, company, or other organization. One acquires debt when one borrows money. Generally speaking, one acquires debt for a specific purpose, such as funding a college education or purchasing a house. In business and government, debt is often issued in the form of bonds, which are tradeable securities entitling the bearer to repayment at the appropriate time(s). Occasionally, especially for personal loans, debt is issued without interest or other compensation; one simply pays back what was lent. This is exceedingly rare in business and a debtor almost always compensates a creditor with a certain amount of interest, representing the time value of money. However, some areas of finance, especially Islamic banking, do not allow debt with interest.

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Debt. A debt is an obligation to repay an amount you owe. Debt securities, such as bonds or commercial paper, are forms of debt that bind the issuer, such as a corporation, bank, or government, to repay the security holder. Debts are also known as liabilities.

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debt

An obligation to pay another.

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Debt

What Does Debt Mean?

An amount of money borrowed by one party from another. Many corporations and individuals use debt as a method for making large purchases that they otherwise could not afford at the time of purchase. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.

Investopedia explains Debt

Bonds, loans, and commercial paper are examples of debt. For example, a company may look to borrow $1 million so that it can buy a certain piece of equipment. In this case, the debt of $1 million will have to be paid back (with interest owing) to the creditor at a later date.

Related Terms:
• Credit Rating
• Debenture
• Debt Financing
• Interest Rate
• Liability