Exposure at Default (EAD) is a financial term commonly used in risk management and credit risk analysis. It refers to the total amount of money that a lender is exposed to at the time of a borrower's default on a loan or credit obligation. EAD is a critical component in the calculation of regulatory capital requirements for banks and financial institutions under frameworks such as Basel II and Basel III. EAD represents the potential loss that a lender may incur if a borrower fails to meet their repayment obligations.
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