When the price of a stock rises significantly higher than that can be justified by the dividends the firm can be expected to pay in future,a(n) _____ is said to have occurred.

Question

Quizplus · Accepted Answer

A stock market bubble occurs when the price of a stock rises significantly higher than the fundamental value based on the company's earnings or dividends. This is often caused by speculation and hype, rather than actual market fundamentals. Eventually, the market will correct itself, resulting in a crash or significant drop in the stock price.

When the Price of a Stock Rises Significantly Higher Than