Question

Which statement best describes the relationship between the stock market and herd behavior?

A.) Stock market employees work in a constant state of anxiety, much like herding animals.

B.) Herd behavior contributes to stock market surges and crashes because it compels stockbrokers to act on emotion rather than reason.

C.) Both herd behavior and the stock market are motivated mainly by greed, which prevents people from using logic and reason.

D.) Stock market bubbles and crashes are sometimes caused by herd behavior but are most often caused by fear.

Answer 1

Answer:

Option A would be the correct answer.

Explanation:

All other options are either vague or unrelated to the term "relation", as asked in question.

Answer 2

Option B best describes the relationship between stock market and herd behaviour because :

1. Stockbrokers try to maximise the profit earned in each term of their business. They tend to follow each other while doing this.

2 .This leads to a total lack of reason

3. They work on mutual trust and emotion only to gain the maximum profit.

Thus they act as a herd of animals while trying to increase their profits.