Which term describes a rapid selling of stocks causing prices to fall and market turmoil?

Which term describes a rapid selling of stocks causing prices to fall and market turmoil?

• A. Stock buybacks
• B. Stock market crash
• C. Market rally
• D. Price stabilization

Answer: (B)

A stock market crash is the rapid selling of stocks across many securities that drives prices down and creates widespread market turmoil. This phenomenon happens when panic or a sudden loss of confidence prompts a large number of investors to sell, often with heavy trading volume and quickly cascading losses. It characterizes a sharp, broad decline in prices in a short period, unlike calmer downturns or gradual declines. Stock buybacks involve a company repurchasing its own shares, which can affect supply and price but don’t describe a rapid, marketwide sell-off. A market rally refers to a period when prices rise, opposite of a crash. Price stabilization describes efforts or conditions that dampen volatility and help prices settle, not the sudden plunge itself.

A stock market crash is the rapid selling of stocks across many securities that drives prices down and creates widespread market turmoil. This phenomenon happens when panic or a sudden loss of confidence prompts a large number of investors to sell, often with heavy trading volume and quickly cascading losses. It characterizes a sharp, broad decline in prices in a short period, unlike calmer downturns or gradual declines.

Stock buybacks involve a company repurchasing its own shares, which can affect supply and price but don’t describe a rapid, marketwide sell-off. A market rally refers to a period when prices rise, opposite of a crash. Price stabilization describes efforts or conditions that dampen volatility and help prices settle, not the sudden plunge itself.