Which statement is correct?
A) When stock prices barely change for a while, they are said to be stuck in a "bubble."
B) Bubbles can result when prices rise rapidly and investors join the game on the assumption that prices will continue to rise.
C) Most bubbles with hindsight can be justified by the improved fundamentals.
D) "Bubbles" is another term for stocks in high-tech industries.

Question

Quizplus · Accepted Answer

Option B correctly states that bubbles can occur due to rapid increases in prices and investor assumptions that prices will continue to rise. Option A is incorrect as a "bubble" refers to a rapid and unsustainable increase in prices, not a lack of movement. Option C is incorrect as bubbles are typically characterized by prices that are not supported by fundamentals. Option D is incorrect as bubbles can occur in any industry, not just high-tech.

Which Statement Is Correct