The term Ponzi is named after Charles Ponzi, who developed a money-making scheme in the 1920s. A Ponzi scheme relies on:
A) attracting new investors to the scheme, whose money is used to pay existing investors and hence keep the scheme going.
B) asking existing investors in the scheme to pay back new investors and hence keep the scheme going.
C) finding new investors to keep the scheme going
D) Rewarding existing investors in the scheme with money from their investments.

Question

Quizplus · Accepted Answer

A Ponzi scheme involves attracting new investors who are promised high returns on their investments. However, the returns are paid to existing investors using the money from new investors, rather than from profits. The scheme is unsustainable and eventually collapses when there are not enough new investors to pay the returns owed to existing investors. Charles Ponzi famously used this scheme in the 1920s to defraud investors of millions of dollars.

The Term Ponzi Is Named After Charles Ponzi, Who Developed