CISI Professional Practice Exam 2025 – Complete Prep Guide

Question: 1 / 400

What is the primary difference between a bull market and a bear market?

A bull market is characterized by falling prices; a bear market by rising prices

A bull market indicates investor pessimism; a bear market indicates optimism

A bull market has increasing prices and optimism; a bear market has decreasing prices and pessimism

The primary distinction between a bull market and a bear market lies in their respective trends and the associated investor sentiment. In a bull market, prices of securities are rising or are expected to rise, fostering an atmosphere of optimism among investors. This optimism contributes to increased buying activity, as many believe that prices will continue to ascend. Conversely, in a bear market, prices are falling or expected to fall, leading to a sense of pessimism. This results in decreased buying and increased selling, as investors are wary of potential losses.

Therefore, the accurate characterization of a bull market as one with rising prices and optimism, while a bear market exhibits decreasing prices and pessimism, effectively conveys the fundamental differences in market dynamics and investor behavior during these periods.

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A bull market typically lasts longer than a bear market

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