Whenever a set of stock prices go unnaturally high and subsequently crash down, the market experiences what we call a(n) ___________________.
A) Financial meltdown
B) Irrational behavior
C) Stock market bubble
D) None of these

Question

Quizplus · Accepted Answer

When the stock prices go unnaturally high and then crash down, it is usually a result of a stock market bubble - a situation where the prices of stocks are driven far beyond their intrinsic values due to speculation and hype. The burst of such a bubble can lead to a sudden drop in stock prices, causing losses for investors and triggering a market crisis. The other options - financial meltdown and irrational behavior - may also occur during a market crash, but they do not specifically describe the phenomenon of a stock market bubble.

Whenever a Set of Stock Prices Go Unnaturally High and Subsequently