Gary McNeil sends a mass email to U.S. citizens providing them with the opportunity to purchase certificates of deposit through a bank in the Cayman Islands that guarantees a 10 percent return on their investment. The early investors were paid a 10 percent return, while subsequent investors were paid with purchases from new investors. This type of transaction is known as a

a. ponzi scheme.
b. insider trading.
c. stock option.
d. security.

Answer: a. ponzi scheme.