During the price rise associated with a speculative bubble, capital is invested:
A) efficiently.
B) in areas where it is not valuable.
C) with less risk than usual.
D) to prepare for another wave of price rises.

Question

Quizplus · Accepted Answer

During a speculative bubble, investors tend to invest their capital in areas where it is not valuable, as they are chasing the price rise and not the fundamental value of the asset. This behavior leads to market distortions and ultimately results in a market crash when the bubble bursts.

During the Price Rise Associated with a Speculative Bubble, Capital