DECA Financial Consulting Complete Practice Exam

A bear market is characterized by falling prices and a decline in investor confidence. This phenomenon typically occurs when the market experiences a sustained drop of 20% or more from its recent highs, often triggered by a variety of economic factors such as recession fears, declining corporate profits, or unfavorable economic indicators. As prices fall, investors tend to become more pessimistic, leading to further selling pressure and a general lack of investment activity. This cycle reinforces the bear market, as confidence wanes and uncertainty prevails.

The other choices reflect conditions that do not align with the nature of a bear market. Rising prices and increased investor confidence signify a bull market. Stable prices and neutral market conditions indicate a sideways or flat market, not necessarily bearish. Rapid growth in technology stocks suggests a strong sector performance, often seen during a bull market where investor enthusiasm is high and prices are on the rise.