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The Ultimate Investment Scams Quiz
by Staff
After Bernie Madoff made off with more than $60 billion in fraudulent funds, investment scams received a lot of high-profile attention in the media. There is, however, a wide array of confidence schemes that financial shysters use to defraud starry-eyed investors. Take this quiz to find out if you can tell the difference between a solid investment and a shady risk.

Why are thinly traded stocks often used as tools in investment scams?

  • easily manipulated stock prices
  • less likely to be noticed by regulators
  • few people know enough about them to realize they are overvalued

How much money do Americans lose to scams every year?

  • about $750,000
  • between $85 million and $125 million
  • billions of dollars

What is the defining feature of an affinity scam?

  • The perpetrators prey on people within a specific community or group.
  • The scammer victimizes his or her relatives.
  • The victims don't even realize they have been scammed.

What product did Charles Ponzi sell in his investment scheme?

  • International Postal Reply Coupons
  • U.S. Government Bonds
  • stock certificates of a small textile company

What is the defining feature of a Ponzi scheme?

  • paying investors dividends from the purchases of other investors
  • selling shares in elite foreign banks
  • sales from unlicensed agents

What type of scam promotes investments in elite overseas financial institutions that don't actually exist?

  • prime bank scams
  • promissory note scams
  • commodity scams

Why does the urgency and scarcity concept within a con work?

  • because people don't want to miss out on a money-making opportunity
  • because the scam artist is more convincing when he speaks with urgency
  • because these emotional pleas make the investor overlook the obvious risks

What is a prospectus?

  • a document that outlines the details, risks and upside potential of an investment
  • an outline of the past returns on a specific investment
  • an investment opportunity that is more risky

What type of investment offers deserve extra caution?

  • overseas investments
  • high value stocks
  • investments in financial institutions, such as banks

Why should you be wary of a quick return on investment?

  • It may be a fake profit in order to encourage further investment.
  • It may be a sign of higher taxes to come.
  • It may indicate that you are involved in a Ponzi scheme.