Because of the uncertain future value of pledged assets,the demand by commercial lenders for as much security as possible often results in the current value of those assets exceeding the extent of the lender's risk.

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Commercial lenders often seek extensive security to mitigate the risk associated with the uncertain future value of pledged assets, leading to situations where the current value of these assets exceeds the extent of the lender's risk. This practice is a precautionary measure to ensure that the lender can recover the loan amount in case of default, despite potential depreciation or devaluation of the collateral.

Because of the Uncertain Future Value of Pledged Assets,the Demand