In a Ponzi Scheme, How Is Confidence in the Perpetrator

question 6

Multiple Choice

In a Ponzi scheme, how is confidence in the perpetrator established?

• A) By obtaining a written note from an auditor that "validates" the services
• B) By issuing notarized certificates
• C) By initially paying returns on investments
• D) Confidence does not need to be established for a Ponzi scheme to be successful

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Definitions:

Fixed Asset

A fixed asset is a long-term tangible piece of property or equipment that a firm owns and uses in its operations to generate income, and is not expected to be consumed or converted into cash within a year.

Short-Term Debt

Financial obligations that are due to be paid within one year or less.

Cash Flow

The net amount of cash being transferred into and out of a business, critical for assessing its liquidity, operational efficiency, and financial health.

Creditors

Individuals or institutions to whom money is owed by a debtor.