Speculative bubbles may occur in the shares market

Question

Quizplus · Accepted Answer

Speculative bubbles occur in the shares market when rational people buy an overvalued share with the expectation of selling it to someone else at a higher price later, creating a self-fulfilling prophecy that drives the share price even higher. This behavior is driven by the belief that there will always be someone willing to buy the share at an even higher price, leading to a price bubble that eventually bursts when the market realizes the overvaluation.

Speculative Bubbles May Occur in the Shares Market