Stan is an investment manager.He has received money from various investors with a promise of very high returns on their investments.The invested money is not supplying enough capital in order to pay the returns promised so he has started using new investor's money to pay older investors.By advertising and by word of mouth,people are anxious to invest with Stan because of the money being paid and with the influx of new investors he is able to continue operating.Stan is:

Question

Quizplus · Accepted Answer

Stan is operating a Ponzi scheme, where he uses new investments to pay off earlier investors, rather than investing the money to generate returns. This is fraudulent and unsustainable, as eventually the scheme will collapse when there are not enough new investors to pay off the promised returns to earlier investors.

Stan Is an Investment Manager