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The application base directory is where the assembly manager begins probing for assemblies.
The AppDomainSetup.ApplicationBase property can influence which permissions are granted to an application domain. For example, an application domain originating from the local computer normally receives full trust based on its location of origin. However, if the AppDomainSetup.ApplicationBase property of that AppDomain is set to the full name of an intranet directory, the AppDomainSetup.ApplicationBase setting restricts the permissions granted to the application domain to a LocalIntranet grant even though the application domain actually originates from the local computer.