What term refers to a market condition where investors cannot pay off their credit after purchases?

What term refers to a market condition where investors cannot pay off their credit after purchases?

• A. Speculation market
• B. Bull market
• C. Bear market
• D. Efficient market

Answer: (A)

The term that best describes a market condition where investors cannot pay off their credit after purchases is "speculation market." In a speculation market, investors engage in buying and selling assets primarily on the basis of expected future price movements, often using borrowed money (or credit) to increase their purchasing power. This can lead to situations where some investors accumulate excessive debt, resulting in an inability to pay off their purchases when the market does not perform as they anticipated. In contrast, a bull market denotes a period of rising prices that encourages buying, a bear market signifies declining prices and generally results in selling, and an efficient market suggests that asset prices reflect all available information. These terms highlight different market dynamics but do not specifically refer to the inability of investors to settle their debts from speculative purchases.

The term that best describes a market condition where investors cannot pay off their credit after purchases is "speculation market." In a speculation market, investors engage in buying and selling assets primarily on the basis of expected future price movements, often using borrowed money (or credit) to increase their purchasing power. This can lead to situations where some investors accumulate excessive debt, resulting in an inability to pay off their purchases when the market does not perform as they anticipated.

In contrast, a bull market denotes a period of rising prices that encourages buying, a bear market signifies declining prices and generally results in selling, and an efficient market suggests that asset prices reflect all available information. These terms highlight different market dynamics but do not specifically refer to the inability of investors to settle their debts from speculative purchases.