Stock market bubbles typically lead to all of the following except:

Question

Quizplus · Accepted Answer

Stock market bubbles are characterized by irrational exuberance and speculation, leading to inflated stock prices that are not warranted by fundamental factors such as earnings and dividends. As a result, resources may not be efficiently allocated, and investors may be misled by inaccurate market signals. Bubbles often burst, leading to stock market crashes and significant losses for investors. Patterns of volatile returns and gaps between actual stock prices and those warranted by fundamentals are also common during stock market bubbles. However, an efficient allocation of resources is not a typical outcome of a bubble.

Stock Market Bubbles Typically Lead to All of the Following