A rise in the price of an asset above its fundamental value is called a(n):
A) financial panic.
B) insolvency.
C) liquidity crisis
D) speculative bubble.

Question

Quizplus · Accepted Answer

A rise in the price of an asset above its fundamental value is usually the result of excessive speculation and investor euphoria, which can lead to a speculative bubble. This is characterized by a rapid increase in asset prices, often fueled by investor optimism and a rush to buy into the asset before the price rises even further. Eventually, the market realizes that the asset is overvalued, causing prices to crash and leaving many investors with significant losses.

A Rise in the Price of an Asset Above Its