What term describes a market characterized by declining prices?

What term describes a market characterized by declining prices?

• A. Bull market
• B. Bear market
• C. Stagnant market
• D. Volatile market

Answer: (B)

A market characterized by declining prices is referred to as a bear market. This term is widely used in finance and investing to signify a sustained period during which prices in a financial market fall, typically defined as a drop of 20% or more from recent highs. The sentiment during a bear market is generally pessimistic, leading to a lack of confidence among investors who may fear continued losses. Bear markets can occur in various segments, including stocks, bonds, and other asset classes, and they can be a result of various economic factors such as deteriorating economic fundamentals, rising unemployment, or geopolitical issues that affect market confidence. In contrast, a bull market signifies rising prices and positive investor sentiment. A stagnant market indicates little to no price movement or growth, while a volatile market is characterized by rapid fluctuations in prices but does not necessarily indicate a consistent trend of decline or growth. Thus, bear market is the appropriately defined term for a situation marked by enduring price declines.

A market characterized by declining prices is referred to as a bear market. This term is widely used in finance and investing to signify a sustained period during which prices in a financial market fall, typically defined as a drop of 20% or more from recent highs. The sentiment during a bear market is generally pessimistic, leading to a lack of confidence among investors who may fear continued losses.

Bear markets can occur in various segments, including stocks, bonds, and other asset classes, and they can be a result of various economic factors such as deteriorating economic fundamentals, rising unemployment, or geopolitical issues that affect market confidence.

In contrast, a bull market signifies rising prices and positive investor sentiment. A stagnant market indicates little to no price movement or growth, while a volatile market is characterized by rapid fluctuations in prices but does not necessarily indicate a consistent trend of decline or growth. Thus, bear market is the appropriately defined term for a situation marked by enduring price declines.