Which statement is true about principal?(1 point)
Responses
It is everything you pay in addition to repaying the amount you borrow.
It is a percentage of the amount you borrow over time
It is a simple way to compare all the various elements of different loans.
It is the amount you borrow.
It is the amount you borrow.
The statement that is true about principal is: "It is the amount you borrow."
The statement "It is the amount you borrow" is true about principal.
To determine the correct answer, you can start by understanding what principal means in the context of borrowing or finances. Principal refers to the initial amount of money borrowed or the original investment made, before any interest or additional fees are added.
Looking at the given responses, you can evaluate each statement to see which accurately describes principal.
- "It is everything you pay in addition to repaying the amount you borrow" doesn't accurately explain principal because it refers to the overall cost of borrowing rather than the specific amount borrowed.
- "It is a percentage of the amount you borrow over time" does not correctly describe principal either. It may be referring to interest, which is calculated based on a percentage of the principal, but it is not the principal itself.
- "It is a simple way to compare all the various elements of different loans" also does not accurately define principal. It seems to refer to an alternative concept used for comparing loans, rather than the principal itself.
Therefore, the correct statement is "It is the amount you borrow," as it directly defines what principal represents in borrowing or financial terms.