Which of the following best describes a "bubble"?
A) when the price of an asset reaches a new high
B) an unsustainable increase in the price of a class of assets
C) rapid increases in inflation
D) when bond prices rise more quickly than stock prices

Question

Quizplus · Accepted Answer

A bubble refers to an unsustainable increase in the price of a class of assets, where the price far exceeds the asset's intrinsic value. This can lead to a rapid increase in prices, followed by a sudden and severe drop. Option A by itself may not necessarily indicate a bubble, as the price could continue to rise due to legitimate factors. Options C and D do not accurately describe a bubble.

Which of the Following Best Describes a "Bubble