What is meant by a speculative bubble?
A) A pattern in past stock prices that,according to technical analysts,indicates higher future prices.
B) A circumstance where everyone expects higher prices,which in turn causes higher prices.
C) An occasional occurrence in program trading in which many investors simultaneously receive instructions to sell.
D) A situation where poorly informed traders exacerbate any upturns or downturns in the market.

Question

Quizplus · Accepted Answer

A speculative bubble occurs when investors buy assets not because of their intrinsic value, but simply because they expect their prices to rise. This can create a self-fulfilling cycle, in which investor demand drives prices higher, reinforcing investor confidence and attracting even more buyers. Eventually, the bubble bursts, often causing prices to crash back down to levels far below their peak.

What Is Meant by a Speculative Bubble