An entrepreneur obtained money from investors in order to start a business. One of the early things that the entrepreneur did was to buy a new sports car,something she always wanted. This action represents

Question

Quizplus · Accepted Answer

This action represents moral hazard because the entrepreneur is using the investors' money for personal enjoyment rather than investing it in the business. This behavior creates the risk that the entrepreneur may not take the necessary steps to ensure the success of the business, as she is not personally liable for the full amount invested.

An Entrepreneur Obtained Money from Investors in Order to Start