A New York Times Article About Bernie Madoff and His

question 63

Multiple Choice

A New York Times article about Bernie Madoff and his illegal Ponzi scheme stated, "When money goes global, fraud does too." Although the goal of investors who trusted Madoff's investment company was to earn the highest return possible on their investments, they turned a blind eye toward the fact that some of those returns were too good to be true. Individual investors, companies, and even charities lost large sums of money by investing with Madoff's company. Which of the following statements relates to this story?

• A) The unethical behavior of one company had a worldwide ripple effect that can impact the well-being of an economy.
• B) Too much regulation caused the capitalistic nature of Mr. Madoff's business model to fail.
• C) People lost money because of the fluctuations in world trading currencies, questioning the legitimacy of trading abroad.
• D) Investors did not sign contracts with Mr. Madoff's company. The government can only protect individuals and companies who sign enforceable contracts.

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Definitions:

Liquidation Process

The formal process of winding up a company's operations, selling its assets, and using the proceeds to pay off creditors before ceasing operations.

Sole Proprietorship

A business owned and operated by one individual, where there is no legal distinction between the owner and the business entity.

Incorporated

The process of legally declaring a business entity as a corporation, providing its owners with benefits such as limited liability.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services provided on credit.