Table of Contents

## What is a starting amount in an account or the amount borrowed?

In the context of borrowing, principal is the initial size of a loan; it can also be the amount still owed on a loan. If you take out a $50,000 mortgage, for example, the principal is $50,000.

## What is interest which is calculated not only on the initial principal but also the accumulated interest of prior periods?

Compounding refers to interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the initial principal deposit.

## What is the definition of a principal quizlet?

principal. the person who authorizes an agent to act on his or her behalf. agent. a person authorized to represent another in dealings with third parties. third party.

## What is savings quizlet?

Savings. Refers to the dollars that become available when people abstain for consumption. Financial System. A network of savers, investors, and financial institutions that work together to transfer savings to investors.

## When interest earnings are added to principal and continue to earn interest this is known as?

Compounding interest is to add interest to principal, earning interest on interest. Simple interest is where interest isn’t reinvested, principal stays at original amount, so interest earned is only on original principal.

## What is the interest paid on the original principal only?

Chapter 7 – Loans Vocabulary

A | B |
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Simple Interest | Interest paid on the original principal. |

Annual Interest Rate | The percent of the principal that you earn as interest based on one year. |

Interest Rate | The percent of interest you earn on your savings. |

Principal | The amount of money earning interest. |

## What is the principal agent relationship?

The principal-agent relationship is an arrangement in which one entity legally appoints another to act on its behalf. In a principal-agent relationship, the agent acts on behalf of the principal and should not have a conflict of interest in carrying out the act.

## What duties do principals owe their agents?

A principal owes certain contractual duties to his/her agent. A principal’s primary duties to his/her agent include: To compensate the agent as agreed; and. To indemnify and protect the agent against claims, liabilities, and expenses incurred in the agent correctly discharging the duties assigned by the principal.

## What is the role of savings in the financial system?

The Savings Function: The funds, in the hands of the producers, resulting in the production of better goods and services and an increase in society’s living standards. When savings flow decline, however, the growth of investment and living standards begins to fall.

## What is the price that is paid for the use of another’s money?

Business and Personal Finance Chapter 1 and 3 Vocabulary

A | B |
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Interest | The price that is paid for the use of another’s money. |

Time value of money | The increase of an amount of money due to earned interest or dividends. |

Principal | The original amount of money on deposit. |

## Is interest that is paid both on the principal and on the interest that has already been paid?

Simple interest is based on the principal amount of a loan or deposit. In contrast, compound interest is based on the principal amount and the interest that accumulates on it in every period.

## What are duties of principal?

The role of a principal is to provide strategic direction in the school system. Principals develop standardized curricula, assess teaching methods, monitor student achievement, encourage parent involvement, revise policies and procedures, administer the budget, hire and evaluate staff and oversee facilities.