stock market crash

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A sudden and drastic general fall in security prices on a stock exchange. For example, on ‘Black Monday’, 19 October 1987, the Dow Jones index in New York fell 23 percent in a single day, and major falls occurred in London and other stock exchanges worldwide. A stock market crash is always possible, since the present price of shares is heavily dependent on opinions about future changes. A crash is most likely when a prolonged bull market has pushed shares to high price–earnings ratios.

Subjects: Economics.

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