Financial news is everywhere in the popular press and media. How do you interpret the following examples of financial news related to the concepts in this chapter?

Bernie Madoff s hedge fund, Ascot Partners, failed in 2008 with the shocking news that Mr. Madoff had lost $50 billion of investors funds by using a Ponzi scheme (i.e., not investing new investment funds but merely using them to pay off other investors pulling funds out). When the economy slowed and more investors requested withdrawals, the scam was revealed. Investors around the world lost money, in more than a few cases their life savings. The largest fraud in history, Mr. Madoff faced criminal charges and was sentenced to 150 years in prison. How does this tragic incident affect financial investors and markets? What could you do to help reduce the risk of such an investment problem?