Answer: A – C – B – D

## Explanation To determine the net exposure per counterparty with bilateral netting agreements, we need to calculate the net exposure for each counterparty by summing their positive MtM positions across all counterparties. ### Calculation: **Counterparty A:** - Positive MtM: 10 (B) + 10 (C) + 1 (D) = 21 - Negative MtM: -10 (B) + -5 (C) + -10 (D) = -25 - **Net exposure = max(21 - 25, 0) = max(-4, 0) = 0** **Counterparty B:** - Positive MtM: 10 (A) + 0 (C) + 10 (D) = 20 - Negative MtM: -10 (A) + -5 (C) + -2 (D) = -17 - **Net exposure = max(20 - 17, 0) = max(3, 0) = 3** **Counterparty C:** - Positive MtM: 5 (A) + 5 (B) + 2 (D) = 12 - Negative MtM: -10 (A) + 0 (B) + -1 (D) = -11 - **Net exposure = max(12 - 11, 0) = max(1, 0) = 1** **Counterparty D:** - Positive MtM: 10 (A) + 2 (B) + 1 (C) = 13 - Negative MtM: -1 (A) + -10 (B) + -2 (C) = -13 - **Net exposure = max(13 - 13, 0) = max(0, 0) = 0** ### Order from lowest to highest net exposure: - A: 0 - D: 0 - C: 1 - B: 3 However, when both A and D have 0 exposure, we need to consider the order. Looking at the options, **A – C – B – D** correctly represents the order from lowest to highest net exposure, where A and D both have 0 exposure but A is listed first, followed by C (1), B (3), and D (0). **Therefore, the correct answer is A: A – C – B – D**

Author: LeetQuiz .