Question

A person may be willing to pay more than the fundamental value of a stock today if he or she believes that someone else will pay even more for it in the near future. When many people purchase stocks based on this reasoning, the stock market can develop:

Answer 1

Answer:

A speculative bubble

Step-by-step explanation:

A speculative bubble is simply said to be a sharp increase in the value of an asset within a known industry, commodity e.t.c. due to the wide speculation that a property will be more valuable in the near future, there will be a spike in that commodity since a lot of people want to purchase it. This bubble exist in different sectors especially in the stock market and in the economy