Credit Exposure

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Dictionary Says

Definition of 'Credit Exposure'

The total amount of credit extended to a borrower by a lender. The magnitude of credit exposure indicates the extent to which the lender is exposed to the risk of loss in the event of the borrower's default. Credit exposure can be minimized through purchasing credit default swaps or other types of financial instruments.  
Investopedia Says

Investopedia explains 'Credit Exposure'

For example, if a bank has made short-term and long-term loans totaling $100 million to company A, its credit exposure to company A is $100 million.

In general, a bank will seek to have greater credit exposure to its customers with the highest credit rating, and less exposure to clients with a lower credit rating. If a customer encounters unexpected financial problems, the bank may seek to reduce its credit exposure in order to mitigate the risk of loss arising from a potential default.

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Search results for

'Credit Exposure'

  • Introduction To Counterparty Risk

    http://www.investopedia.com/articles/optioninvestor/11/understanding-counterparty-risk.asp
    ... Indeed, PFE is analogous to VaR, with two exceptions. First, while VaR is an exposure
    due to a market loss, PFE is a credit exposure due to a gain. ...

  • Credit Default Swaps: An Introduction

    http://www.investopedia.com/articles/optioninvestor/08/cds.asp
    ... Using a portfolio of CDS contracts, an investor can create a synthetic portfolio
    of bonds that has the same credit exposure and payoffs. ...

  • The Alphabet Soup Of Credit Derivative Indexes

    http://www.investopedia.com/articles/optioninvestor/07/credit-der-index.asp
    ... What is more common, however, is for a portfolio manager to use a credit derivative
    index. Let's say you want to gain exposure to the high-yield sector. ...

  • Banking Stress Tests: Would Yours Pass?

    http://www.investopedia.com/articles/fundamental-analysis/09/banking-stress-tests.asp
    ... This ratio expresses a bank's risk-weighted credit exposure by measuring a bank's
    Tier 1 an Tier 2 capital against its risk-weighted assets. ...

  • Emerging Markets Exposure Made Simple

    http://stocks.investopedia.com/stock-analysis/2011/Emerging-Markets-Exposure-Made-Simple-TUP-CAT-AVP-COH0922.aspx
    ... support of the obvious companies like Coach (NYSE:COH) (which has big exposure to
    Japan ... Credit Suisse says 52% of its revenue comes from emerging markets alone. ...

  • Credit Crisis: Foundations | Investopedia

    http://www.investopedia.com/university/credit-crisis/credit-crisis3.asp
    ... to employ leverage to magnify otherwise subpar returns without exposure to excessive ...
    lax lending standards facilitated the expansion of a consumer credit bubble ...

  • Simon Says Things Will Get Better

    http://stocks.investopedia.com/stock-analysis/2009/Simon-Says-Things-Will-Get-Better-SPG-GGWPQ-KIM-TCO-BXP-VNO0525.aspx
    ... There is an estimated $1 trillion credit exposure to the commercial real estate
    market, about half of what the consumer or residential credit market had been. ...

  • How Basel 1 Affected Banks

    http://www.investopedia.com/articles/07/BaselCapitalAccord.asp
    ... No recognition of term-structure of credit risk The capital charges are set at
    the same level regardless of the maturity of a credit exposure. ...

  • CFA Level 1 Study Guide - Derivatives - Fundamental Differences ...

    http://www.investopedia.com/exam-guide/cfa-level-1/derivatives/fundamental-differences-between-futures-forwards.asp
    ... Free Annual Reports. More Features ยป. Personal Finance; Credit & Loans; Insurance;
    Retirement; Home & Auto; Savings; Budgeting; Entrepreneurship; ...

  • Fannie Mae And Freddie Mac, Boon Or Boom?

    http://www.investopedia.com/articles/07/fannie-freddie.asp
    ... according to Treasury Secretary Steel, at the end of 2006, Fannie Mae and Freddie
    Mac had about $4.3 trillion of mortgage credit exposure, which was about 40 ...

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