General Securities Representative (Series 7) Practice Exam – Your All-in-One Guide to Exam Success!

A bear market is indeed characterized by declining prices, typically defined as a drop of 20% or more in stock prices over a sustained period, often influenced by pessimistic investor sentiment regarding future economic conditions. This decline can lead to widespread fear and might trigger a broader economic downturn. In contrast, a bull market is marked by rising prices and increasing investor confidence, where stock prices advance by 20% or more from recent lows, often fueled by a strong economy and positive market sentiment.

Understanding these fundamental characteristics helps investors make better decisions based on market conditions. In a bear market, the overall sentiment is negative, and there may be increased volatility and uncertainty, while in a bull market, optimism prevails, encouraging investment and economic growth.