Principal repayment refers to the act of paying back the original amount borrowed from a lender, distinct from any interest that may accrue over the life of a loan. This concept is crucial in debt management, as it directly affects the cash flows and overall investment strategy of an entity, particularly in fixed-income securities. Understanding how and when principal repayment occurs is essential for managing interest rate risk and ensuring sufficient liquidity.
congrats on reading the definition of Principal Repayment. now let's actually learn it.