An Investor Who Wants to Invest in Only One Start-Up

question 6

Multiple Choice

An investor who wants to invest in only one start-up business is trying to decide between two new businesses. The entrepreneurs in both businesses seem quite similar to the investor. However,they are not similar. One has much better skills than the other,who is misrepresenting his skills. The investor is facing the situation known as

• A) equity apprehension.
• B) breakeven syndrome.
• C) adverse selection.
• D) covenants.
• E) cash flow condition.

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Definitions:

Gratuitous Agent

An agent who acts on behalf of another without receiving any form of compensation or benefit for their services.

Duty of Loyalty

A legal obligation of fiduciaries to act in the best interest of the party they owe the duty to, avoiding conflicts of interest and self-dealing.

Perform as Promised

Fulfilling the obligations or conditions as outlined in a contract or agreement.

Independent Contractor

An individual or entity hired to perform work for another entity as a non-employee, responsible for their own taxes and often their own tools and work schedule.