Question

    In the context of credit risk management, "exposure"

    refers to:
    A The amount of loan that a borrower has taken from multiple lenders Correct Answer Incorrect Answer
    B The percentage of non-performing assets in a bank’s portfolio Correct Answer Incorrect Answer
    C The total value of funds at risk in case of a borrower defaulting Correct Answer Incorrect Answer
    D The probability of default in a specific sector Correct Answer Incorrect Answer
    E The extent of liquidity available with the bank for lending Correct Answer Incorrect Answer

    Solution

    Exposure is the total amount a lender stands to lose if the borrower defaults. It includes principal, interest, and other associated obligations.

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