ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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profits from stocks are rising, making it a good time to buy
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many investors are selling their stocks in anticipation of lower profits
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profits from stocks are falling, making it a good time to buy
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many investors are buying stocks in anticipation of higher profits
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Detailed explanation-1: -A bear market is defined by a prolonged drop in investment prices-generally, a bear market happens when a broad market index falls by 20% or more from its most recent high. The reverse of a bear market is a bull market, characterized by gains of 20% or more.
Detailed explanation-2: -Bears are pessimistic about the market and think that it will go down. A bear can profit from being right about this by selling stocks or ETFs short in the market.
Detailed explanation-3: -Investors Have New Opportunity Unlike in bull markets where most stocks go up in price, in a bear market, the fangs come out to drag most stocks down. In fact, history shows that three out of four stocks will decline during a bear market.
Detailed explanation-4: -One thing to keep in mind during bear markets is that you aren’t going to invest at the bottom. Buy stocks because you want to own the business for the long term, even if the share price goes down a little more after you buy.