Credit exposure is the component of credit risk. Credit risk only covers the probability of default and the rate of recovery. By definition, credit risk is the failure to repay a loan or honor a contractual obligation. This will cause a break in investment. Rather than credit exposure, the probability of default measures whether the borrower is unable to repay the loan. Sometimes it takes a year from the specified time when the borrower is unable to repay as expected. It is usually written as a matter of default or PD.
It involves managing various risks depending on the situation and economic conditions. The recovery rate describes the portion of the loss that has a chance of recovery. Sometimes, it is the subject of bankruptcy proceedings or efforts such as debt collection. Collection extends to the principal and interest on the debt in default. Basically, it is a safety net when signs of bankruptcy and default occur. Of course, the school principal has a lot of influence on money. But the term is often used in relation to credit risk, especially in recovery rates.
It refers to the initial sum of money borrowed and the loan applied to the investment. It can also refer to the face value of the link. In terms of lending, the principal is the initial amount of the loan or bond that the issuer must repay. Interest added to the recovery rate is the amount of interest per day specified in a loan or other financial service, but to repay the amount paid in the component. Therefore, for the lender, it is the interest that is collected or the interest income. Meanwhile, for the borrower, interest is collected.