Question

which of the following statements related to market crashes is correct?

B 8 Which of the following statements related to market crashes is correct? Select one ut ot 0 a. Actions in Washington, DC, may have helped contribute to the market crashin 1929 but not to the 1987 crash. O b. Financial market crashes are unique to the United States O c. The market crash of 1987 occurred on a day when trading volume was light, indicating there were a limited number of rrational investors involved. O d. Once the market finally crashed in 1929, stock prices began a long period of steady increases O e. A severe market decline tends to occur over a multiday period

Answer 1

A severe market decline tends to occur over a multi-day period

The fall in the stock market is additive and the variance of multi-day price changes is the indicator for thie information-related component of volatility. The effects of derivatives are determined by comparing price volatility at daily and multi-day time horizons . The variance of daily changes tends to rise more than the variance of multi-day changes. Hence the decline results in amplified results over a multiday period.