What does a 'bear market' typically indicate?

Question: What does a 'bear market' typically indicate?

Answer options:

• A period of sustained economic growth and rising stock prices. ✅ A period of declining stock prices, typically by 20% or more, indicating widespread pessimism.
• A market dominated by active traders and high volatility.
• A market where prices remain relatively stable.

Correct answer: A period of declining stock prices, typically by 20% or more, indicating widespread pessimism.

Explanation: A bear market is characterized by a prolonged period of declining stock prices, typically defined as a 20% or greater drop from recent highs, often accompanied by widespread investor pessimism and negative economic sentiment.