1. A person or firm employing another to act as their agent. A person using an estate agent to sell a house, for example, is a principal; the estate agent is the agent. The principal-agent problem is concerned with how agents can be induced to act in the interests of the principal rather than their own. 2. The amount of money borrowed at the start of a loan. The borrower is obligated to pay interest on the loan and eventually to repay the principal.
Reference: Oxford Press Dictonary of Economics, 5th edt.
Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >