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ACTUAL EXPOSURE Definition & Legal Meaning

Definition & Citations:

The amount of CREDIT RISK exposure in a DERIVATIVE or financial transaction, typically reflected as a MARKTOMARKET valuation. If DEFAULT occurs when actual exposure is positive to the nondefaulting party, a credit loss arises; if negative, no credit loss occurs. Actual exposure is one of two components, along with FRACTIONAL EXPOSURE, in the determination of total credit exposure. Also known as ACTUAL MARKET RISK, REPLACEMENTCOST. See also POTENTIAL EXPOSURE.ACTUAL MARKET RISK See ACTUAL EXPOSURE.ACTUALS Physical commodities, such as GRAINS, SOFTS, metals, and energy, which are traded and delivered under COMMODITY DERIVATIVE contracts.

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