On October 19, 1987, stock prices in Hong Kong began collapsing and spread throughout the day into Europe and then North America as their stock markets opened for trading. Within one week, Hong Kong fell 46 percent, Australia 42 percent, the U.S. 23 percent, and Canada 23 percent. This is an example of an event called _____.

Question

Quizplus · Accepted Answer

The event described is an example of contagion, which refers to the spread of financial distress from one market to another. The collapse in Hong Kong triggered a chain reaction of panic selling and market declines in other countries, leading to a global stock market crash.

On October 19, 1987, Stock Prices in Hong Kong Began