Which one of the following statements is true?
A)Market crashes tend to be accompanied by low market volume.
B)The Asian market crash was followed by a quick recovery.
C)The market crash of 1929 and the crash of 1987 are very similar in both the percentage decline in market value and in the ensuing market recovery.
D)Market crashes tend to follow market bubbles.
E)Market bubbles and crashes prove that financial markets are inefficient.

Question

Quizplus · Accepted Answer

Market crashes tend to follow market bubbles, which are marked by excessively high prices and speculative buying, leading to an eventual collapse. This was seen in the dot-com bubble and the housing market bubble. However, market crashes do not necessarily prove that financial markets are inefficient, as they are a natural part of the market cycle and can also be attributed to external factors such as political events or natural disasters.

Which One of the Following Statements Is True