A speculative bubble:
A) explains the rise of Microsoft's stock price over the last 30 years.
B) can help the macroeconomy.
C) can be easily identified, leading to higher than normal returns.
D) arises when stock prices rise more rapidly than they should.

Question

Quizplus · Accepted Answer

A speculative bubble arises when stock prices rise more rapidly than they should, often due to irrational exuberance and hype rather than fundamental factors such as earnings or revenue growth. This can lead to a sudden collapse in prices when the bubble bursts.

A Speculative Bubble