In 1711, a company called the South Sea Company was set up as a merchant trader between Great Britain and South America. Although the company failed to make any real profits, the company's share price rose substantially in a very short time. Eventually, the share price collapsed and returned to the original sale price. This scenario describes:

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The scenario describes a financial bubble, where a company's share price rises rapidly and then collapses. This is a result of excessive speculation and optimism, rather than the company's actual performance.

In 1711, a Company Called the South Sea Company Was