Question

The money borrowed or lent out for a certain period is called,
(a)interest
(b)principal
(c)time period
(d)none of these

Answer 1

Hint: Consider the case of simple interest. Spell out all the terms of the simple interest and find the term which is related to the given definition.

Complete step-by-step answer:
In the case of simple interest, the interest on a sum borrowed is uniform for a certain period. It is a quick method of calculating interest charged on a loan.
The simple interest can be calculated by multiplying interest rates by principal to the period.
Simple interest = Principal \[\times \]rate \[\times \]time period/ 100 =\[\dfrac{PRT}{100}\].
Here, principal is the money borrowed or lent out for a certain period of time. It is represented as P.
Similarly, the rate of interest is the rate of money paid regularly using money lent.
Thus, we got that principal is the money borrowed / lent out for a certain period of time.
Principal (P) = 100\[\times \]Simple interest/ Rate \[\times \]time period.
\[P=\dfrac{100\times S.I}{RT}\]
Hence, option (b) is the correct answer.

Note: Here the principal is the amount which is deposited/ borrowed. So do not get confused between the term principal and total amount.
Total amount is the sum of principle and simple interest.
Total amount = Principle + S.I.