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Understanding the implications of netting on credit exposure is crucial for financial institutions when managing derivative positions with counterparties. Consider that a financial institution has four derivative positions with an investment firm. Calculate the potential loss the financial institution would incur if the investment firm defaults, both under netting and without netting provisions applied. How does the application of netting affect the financial institution's exposure compared to when netting is not utilized?
A
Loss of USD 20 million if netting is used; loss of USD 24 million if netting is not used
B
Loss of USD 20 million if netting is used; loss of USD 44 million if netting is not used
C
Loss of USD 24 million if netting is used; loss of USD 32 million if netting is not used
D
Loss of USD 24 million if netting is used; loss of USD 44 million if netting is not used