Financial pyramid

1. What is the financial pyramid?
2. Is the money pyramid illegal?
3. How do pyramid schemes make money?
4. What is a pyramid scheme example?

What is the financial pyramid?

Financial pyramid. A risk structure that spreads investor's risks across low-, medium-, and high-risk vehicles. The bulk of the assets are in safe, low-risk investments that provide a predictable return (base of the pyramid).

Is the money pyramid illegal?

A pyramid scheme can take many forms, but generally involves the promise of making money by recruiting new people. Pyramid schemes are illegal, and most people lose money.

How do pyramid schemes make money?

In the classic "pyramid" scheme, participants attempt to make money solely by recruiting new participants, usually where:

1. The promoter promises a high return in a short period of time;
2. No genuine product or service is actually sold; and.
3. The primary emphasis is on recruiting new participants.

What is a pyramid scheme example?

internet shopping website were found guilty of operating a pyramid scheme in California. In this scheme, participants purchased a “license,” entitling them to commissions when they sold Big Co-op products to others, including licenses to new participants. ... Big Co-op Inc. is an example of a product-based pyramid scheme.