What is defined as a sum of borrowed money, typically repaid with interest?

The correct response is the definition of a loan, which accurately describes a sum of borrowed money that is usually repaid with interest. A loan involves a lending agreement where the lender provides money to the borrower under specific terms, and in exchange, the borrower commits to repaying the principal amount plus any agreed-upon interest over a period of time.

Understanding this concept is crucial in the context of mortgage lending, as loans form the backbone of financing in real estate transactions. The borrower receives the capital needed to purchase property, while the lender earns interest on the borrowed amount, thus benefiting from the transaction.

The other concepts mentioned—principal, asset, and investment—are related but distinct. Principal refers specifically to the original sum of money borrowed, while an asset denotes something of value that can be owned or controlled and may provide future economic benefits. An investment, on the other hand, refers to an allocation of resources (like money) into an asset or project with the expectation of generating returns. Nonetheless, none of these terms encapsulate the idea of borrowing money for repayment as succinctly as the term "loan."