The word principal has two meanings relevant to investment:
- the amount of a loan excluding accrued interest payments
- a person for whom an agent acts.
In the case of a loan, the principal is the amount originally borrowed.
The principal of a bond may be quite different from the amount actually raised by its issue, as the amount the borrower raises will depend on the market value of a bond of that face value, interest rate, terms, and maturity at the time of issue.
The amount raised by issuing a zero coupon bond is likely to be lot less than its face value. The amount raised by issuing a bond with a floating interest rate is likely to be very similar to its face value.