The dollar amount originally borrowed or financed on which interest is paid; also referred to as the 'face amount' of a loan

The dollar amount originally borrowed or financed on which interest is paid; also referred to as the 'face amount' of a loan

• A. Price
• B. Overhead
• C. Principal
• D. Ownership

Answer: (C)

The principal is the amount originally borrowed or financed on which interest is charged, also known as the face amount of the loan. This is the baseline debt that interest accrues on, and it may be paid down over time as you make payments. The other terms don’t fit as well: price is what you pay to obtain something; overhead refers to ongoing business costs; ownership is the legal right to possess something. So the concept being tested is the principal.

The principal is the amount originally borrowed or financed on which interest is charged, also known as the face amount of the loan. This is the baseline debt that interest accrues on, and it may be paid down over time as you make payments. The other terms don’t fit as well: price is what you pay to obtain something; overhead refers to ongoing business costs; ownership is the legal right to possess something. So the concept being tested is the principal.