Multiple Choice
How did speculative investing contribute to the instability of the stock market, according to the principles of the fraud triangle?
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
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Which illegal real estate practice involves using client funds for personal benefit?
A
Insider trading
B
Embezzlement
C
Money laundering
D
Price fixing
Verified step by step guidance1
Understand the concept of embezzlement: Embezzlement refers to the illegal practice of misappropriating funds entrusted to someone, such as using client funds for personal benefit.
Review the other options provided: Insider trading involves trading securities based on non-public information, money laundering involves concealing the origins of illegally obtained money, and price fixing involves collusion to set prices artificially.
Identify the key aspect of the question: The focus is on the illegal use of client funds for personal benefit, which aligns with the definition of embezzlement.
Eliminate the incorrect options: Insider trading, money laundering, and price fixing do not specifically involve the misuse of client funds for personal benefit.
Conclude that the correct answer is embezzlement, as it directly matches the illegal practice described in the question.
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