S/F/128. Explain the terms information asymmetries, first time lending and repeat lending, and moral hazard. Secondly, discuss the following statement in the context of the two prescribed readings below: 'Lenders are wary of high-technology ventures because of their higher risk. Lenders can overcome this risk by developing close relationships with the business'
(2006, 2000 words)
The paper analyses the concepts of the information asymmetry, repeat lending, moral hazard, etc. discussing the probability of negative returns from lending to firms in high technology industries, and reviewing academic approaches to business and agency risks.
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