SEBI - Investor Certification Examination
SEBI - Investor Certification Examination
Q 1. Who is Charles Ponzi, and why are Ponzi Schemes named after him?
He is a famous scientist who discovered the Ponzi Schemes
He is a fictional character from a novel about fraudulent schemes
He constructed one of the first fraudulent investment schemes, hence the name "Ponzi Schemes."
He is a famous actor known for his roles in movies about financial fraud
Q 2. What is a Ponzi scheme?
A legitimate investment opportunity
A fraudulent investment scheme promising high returns to investors
A government-run savings program
A social club
Q 3. How do Ponzi Schemes generate returns for earlier investors?
By investing in profitable ventures
By using the promoter's personal funds
By using money from subsequent investors
By selling products or services
Q 4. Why do Ponzi Schemes typically attract new investors?
By offering guaranteed returns backed by government bonds
By offering low-risk investments
By offering returns that other investments cannot guarantee, such as abnormally high or consistent returns
Offering tax benefits
Q 5. What happens to a Ponzi scheme when fresh investments slow down?
It becomes more profitable
It collapses under its own weight
It becomes more sustainable
It attracts more investors
Q 6. How do authorities sometimes prevent Ponzi schemes from collapsing?
By investing in the schemes themselves
By promoting the schemes
By acting on suspicion of a scheme being a Ponzi scheme
By ignoring the schemes
Q 7. What is the ultimate fate of a Ponzi scheme?
It has become a successful long-term investment opportunity
It collapses because the earnings are less than the payments to investors
It becomes a government-regulated investment scheme
It has become a widely recognized, legitimate investment option
Q 8. What is the primary method of payment in a Ponzi Scheme?
Payment from actual profits generated by investments
Payment from the promoter's personal funds
Payment from subsequent investors
Payment from bank loans
Q 9. What role does the promoter play in a Ponzi Scheme?
Providing legitimate investment opportunities
Generating actual profits for investors
Vanishing with investors' money
Providing financial education
Q 10. How do Ponzi Schemes differ from legitimate investment opportunities?
They offer guaranteed returns
They are regulated by the government
They generate actual profits for investors
They are named after famous investors
Q 11. Which of the following is a red flag indicating a potential Ponzi scheme?
Low returns with high risk
High returns with little or no risk
Guaranteed moderate returns
Investments involving licensed professionals
Q 12. What should you be wary of in terms of investment returns?
Consistent positive returns in fluctuating markets
Consistent negative returns in fluctuating markets
Fluctuating returns based on market conditions
Returns dependent on company performance
Q 13. Which type of investments should raise suspicion due to lack of registration?
Investments registered with regulators
Investments involving licensed professionals
Investments registered with government agencies
Unregistered investments
Q 14. What is a common characteristic of individuals involved in Ponzi schemes?
Licensed and registered professionals
Transparency in financial disclosures
Unlicensed sellers
Accessible investment information
Q 15. What should you do if you encounter difficulty in receiving investment payouts?
Wait patiently for scheduled payments
Invest more money for higher returns
the issue to regulators
Ignore the problem and continue investing