When traders move as a herd in the same direction at the same time such as what occurred when George Soros betted against the British pound in 1992,a(n)_____ occurs.
A)efficient market
B)inefficient market
C)bandwagon effect
D)Fisher Effect

Question

Quizplus · Accepted Answer

The bandwagon effect occurs when there is a trend among investors to move in the same direction at the same time, often influenced by perceived market signals or social pressure. The situation described in the question, where George Soros betted against the British pound and other traders followed suit, is an example of the bandwagon effect. The other choices listed - efficient market, inefficient market, and Fisher Effect - do not fully describe the scenario or the concept involved.

When Traders Move as a Herd in the Same Direction