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Concept
Loss Given Default
Loss Given Default
(LGD) is a crucial metric in
credit risk management
that estimates the
amount of loss
a
lender incurs
when a
borrower defaults
on a loan, expressed as a
percentage of total exposure
. It is vital for calculating
expected losses
and setting aside
capital reserves
, influencing both
risk assessment
and
pricing strategies
in
lending institutions
.
Relevant Degrees
Finance 100%
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