Stock Market Crash Flashcards, test questions and answers

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What is Stock Market Crash?

The Stock Market Crash of 1929 was one of the most devastating financial crises in world history. It began on October 24, 1929 when stock prices suddenly plummeted and caused a domino effect throughout global markets. The crash marked the beginning of the Great Depression, a period of economic hardship that would last for more than a decade. The immediate cause of the crash was an over-expansion in stock prices during the 1920s. Stock prices had risen dramatically since 1924 and many investors believed they could continue to rise indefinitely. As a result, speculation became rampant and millions of people poured their money into stocks without considering their risks or underlying value. This created an unsustainable bubble that eventually burst when investors began selling off their stocks in response to news reports about increasing unemployment levels and weakening company profits. The effects of the Stock Market Crash were far-reaching and devastating for most Americans. Over 16 million shares were sold on October 29th alone, wiping out billions of dollars from people’s savings accounts overnight. In addition, banks who had invested heavily in stocks also suffered major losses and thousands closed as a result; this forced households to default on mortgages and other debts leading to even further economic decline across the country. The Stock Market Crash triggered a global recession that lasted until World War II ended in 1945 but its reverberations still linger today it has become a cautionary tale for investors around the world who must now be aware of both potential market euphoria as well as its accompanying risks before investing blindly in stocks or other assets with hopes for high returns without considering their risk level or underlying value.