warrant the capitalization on which his collateral is appraised. In self-defence he must decline the extension of a loan, and forced liquidation must follow. Such a liquidation involves
mtea of int) = J-, diEregaidlng risk ; cr = normal credit
Theo St the Initial pluue,
ea = (mar = pr — eipjontp,
cr = ~ At Uie sabaeqnent phase, ot ezalutioii,
ea' = eft + Aea = mu' x outp
= Kpr'= pr + Apr)- eip]ou^ = (mar + Amar) outp>ea, cap'= ^ = ■ ■- ■ — ■> cap,
At the ooDcluding phase, of depreasion,
ea"= ea'— Aoa' = mar" x outp
= [pr'— (eip'= eip + aexp)]outp<«