Your former college roommate calls you and asks to borrow $10,000 so that he can open a pizza restaurant in his hometown. In justifying this request, he argues that there must be significant demand for pizza and other fast food in his hometown because there are lots of such restaurants already there and three or four new ones are opening each month. He also argues that demand for convenience food will continue to increase and he points to the large number of firms that now sell frozen dinners in grocery stores. What are the risks involved in choosing to lend him money?
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