ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Principal is also the original amount of investment made in an asset, separate from any earnings or interest accrued.

Detailed explanation-2: -The original principal balance on a loan is the amount of the loan before any payments are made. This means that a loan in the amount of $130, 000 will have an original principal balance of $130, 000.

Detailed explanation-3: -In investing, the principal is the cash you hold in an investment account. If you’re borrowing money, the principal is the actual amount you borrow, before interest begins to apply.

Detailed explanation-4: -The principal is the total amount borrowed from a lender or the initial amount invested. In other words, it is the original sum of money that has been borrowed or invested.

Detailed explanation-5: -The principal balance of your loan is the original amount you borrowed, while the interest is what you pay for the privilege of borrowing the money. With most loans, your monthly payment is split up between principal and interest.