A ________ is an investment fraud in which a manager collects funds from clients, claims to invest those funds on their behalf, and reports extremely favorable investment returns, but in fact uses the funds for his or her own use.

Question

Quizplus · Accepted Answer

A Ponzi scheme is a fraudulent investment scheme where a manager collects money from investors and promises high returns. However, these returns are paid from the money collected from new investors rather than through actual profits earned. Eventually, when new investors stop joining, the scheme collapses, and the people who invested lose all their money. Therefore, option A) Ponzi scheme is the correct answer.

A ________ Is an Investment Fraud in Which a Manager