Which statement accurately describes a bear market?

A bear market is defined as a market condition in which the prices of securities are falling or are expected to fall. This typically manifests as a decline of 20% or more in various indexes over a sustained period, usually accompanied by widespread pessimism and negative investor sentiment. The focus on declining prices indicates a lack of confidence among investors, leading to a further decrease in demand for securities.

In contrast to a bear market, a market characterized by increasing prices would be referred to as a bull market. A market trend with stable prices implies that prices are neither consistently rising nor falling, which does not align with the characteristics of a bear market. Similarly, a market described as having high volatility does not accurately depict a bear market, as volatility can occur in various market conditions, including both bears and bulls. Thus, understanding a bear market is crucial for investors seeking to navigate market fluctuations effectively.