In Sentence I, the word "principal" is incorrectly used. The correct word here should be "principle", which refers to a fundamental truth, law, or assumption. "Principal" refers to a person in a position of authority or something of primary importance, which doesn't fit the intended meaning.
In Sentence II, the word "principal" is correctly used. In financial contexts, "principal" refers to the original sum of money invested or loaned, separate from interest earned. This is an accurate use.
In Sentence III, "principal" is again correctly used, meaning main or most important. It fits well in this context.
So, Sentences II and III use "principal" correctly, while Sentence I misuses it and should have used "principle."
Hence, option (b) is the answer.
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