What does the term 'principal' refer to in the following contexts?

Show Answers

The entire sum of money that is borrowed or loanedThe individual impacted by the decisions of an agent in a principal-agent relationshipBoth of the above definitionsNeither of the above

Explanation

Option A refers to the principal as the total borrowed or lent amount, while option B refers to the principal as the party affected by an agent's choices. Therefore, both definitions apply, making option C correct.