THE GREAT DEPRESSION 1929 1940
THE GREAT DEPRESSION
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
A Minsky Moment in which there is a sudden major collapse of stock value.
|
|
|
An increase in company stock, due to monitoring a company’s performance
|
|
|
Sustained market prosperity due to responsible investing
|
|
|
None of the above
|
Detailed explanation-1: -Minsky Moment refers to the onset of a market collapse brought on by the reckless speculative activity that defines an unsustainable bullish period. Minsky Moment crises generally occur because investors, engaging in excessively aggressive speculation, take on additional credit risk during bull markets.
Detailed explanation-2: -There are three phases of credit lending that lead to a Minsky Moment– hedge, speculative borrowing, and the Ponzi phase.
Detailed explanation-3: -A leading example of this Minsky moment is the 2008 financial crisis. At the peak of this crisis, quite a substantial number of markets assumed their all-time lows which led to a selloff in assets to cover debts and higher default rates. This is referred to as margin calls.
Detailed explanation-4: -In Minsky’s view, the financial crisis leads to an increased unwillingness to finance investment. The decline in investment spending negatively affects profits, which only worsens the difficulties in meeting debt payment commitments.