Capital Market Is The Lifeblood Of Business And Industry

During the 1920's millions of Americans began investing in stocks for the first time. They heard about how rich people were getting by investing so they all decided to do it. Many new investors entered the stock market using borrowed money. Stock market prices rose steadily as inflated market demand outpaced increases in the capital value of businesses. Investors began to realize that a large imbalance existed between stock prices and the amount of money needed to back them up, and began to sell. On October 29, 1929, great numbers of people tried to sell their stocks all at once. This created chaos in the accounting of stocks and for brokers. The New York Stock Exchange and other exchanges prices dropped so dramatically that this event became known as the crash of 1929. Millions of investors lost their savings in the crash and many were deeply in debt since

Why the stock market crashed, was due to two factors, economic and financial. For example economic factors where, poor distribution of wealth, many consumers relied on credit, credit dried up, consumer spending dropped and industries struggled. Financial factors were a threat to the stock market rise in the mid-1920s. Speculation in stock

In order to study how stock prices react to these events, approximate three years of continuous daily stock price are chose, beginning at 17th March 2008 and ending more than three months after the final event at 22nd April 2011. In addition, SHANGHAI Stock Exchange Index (SSE) is adopted as a proxy of the market portfolio.

Besides ruining many thousands of individual investors with crash, the decline in the value of assets greatly strained banks and other financial institutions as well. These places made the same big mistake the American people did before the crash, they had too much confidence and was very naive about the current state of the economy. Due to their false confidence in the economy they made an overextension of credit. Particularly the banks that held stocks in their portfolios were affected. Many banks were so confident in the newly rising economy that they irrationally gave out loans to citizens who wanted to invest in stock even when the stock was not 100% secure which became apparent during the Stock Market Crash of 1929 (Nelson). The crash of the banks did not only

While there may be some arguments among historians, speculation is obviously one of the major causes of the Crash. Speculation (In the context of the stock market) is the buying of stocks with the purpose of profiting not from the dividends that the stock pays, but by the fluctuations in the price (Axon 31). Speculation is often looked down upon by the market as a profession, as it is seen as a form of gambling with possible serious repercussions. The secret is that speculation is actually

The second reason was the failures in banking. Many banks were unprepared for the market crash. Banks were investing a part of people’s money into the market in hope to profit from it. When the market crashed, many were withdrawing their fund. However, the banks did not have enough fund.

The stock Market crash was caused because the market was overrated, overbought and dominated. The economic conditions were not helping anyone. The Crash was due to the market opening of 11% or less. Financiers and institutions chipped in with proposals over the market price to stop the panic. Even though the losses on that day were smaller compared to the next two days. Yet, this loss was unreal, as the next Monday, commonly now known as Black Monday the losses were dropping 13% without provoking the margin calls. Afterward, the offers disappeared completely and the market fell again, another 12%. From this point on the market completely fell hitting rock bottom causing horrible things to go wrong. This was one of the factors that lead to the great depression.

There were many historical circumstances that caused the failure of the stock market in 1929. One of the major reasons for this collapse was speculation and irrational exuberance of the stock market in the 1920s. The stock market boosted the confidence of many individuals in the United States for gaining tremendous wealth because of its growing success in the economy. Therefore, many people placed

The financial collapse is a very complex issue rooted in multiple causes, making it hard to put into a single sentence. However at it’s core the reason for the collapse is that many investors and banks tried to get rich by taking on assumptions about the housing market and taking on huge risks that they didn’t realize the full extent of.

It is said that the cause of the catastrophic stock market crash known as the great depression was due mostly to uncontrolled political and industrial systems otherwise known as capitalism. However, the timeline leading up to the Great Depression proves that many other factors played a role in the stock market crash that occurred in the decade of the 1930's. So lets take a look at rather four, factors contributing to the great depression that we will further discuss in the following paragraphs. Four of the main causes that led up to the great depression were unequal distribution of wealth, uncontrolled political and industrial systems, high tariffs and war debts.

economy, people began buying stocks on the margin. They would borrow most of the stock’s price from a stockbroker and only pay a little bit of the price. If the stock prices kept rising, this system would work well, but if the prices fell, people could not pay the loan back. Near the end of the 1929 year, prices were too high, so people wanted to sell their stocks. They thought the prices would lower soon. Stock prices did go lower and people were not buying. They all wanted to sell their stocks. Prices went even lower on October 29, where 16 million stocks were sold. This caused the collapse of the market.

The stock market crash of 1929 was a four-day collapse of stock prices and the worst decline in U.S. history. Though there have been more market crashes since, with bigger losses, none have rivaled the panic the country experienced during this time. It destroyed the public’s confidence in Wall Street and helped lead to the Great Depression.

The stock market is what one would know as a collective group of buyers/sellers that trade stocks, also known as shares on a stock exchange. These securities are listed on the exchange itself and trade freely each and every day. On the exchange, stocks move hands day in and day out. Companies are able to get their stock listed on the exchange at any time that they want. There are other stocks, too...known as OTC stocks or over the counter stocks that go through a specific dealer. Larger companies tend to have their stocks listed on exchanges all throughout the world. Participants in the market can be anyone from your grandma, to retail investors, day traders, institutional investors, and so forth. One notable exchange is the NYSE; also known as The New York Stock Exchange. Moving forward, a stock market crash is when a decline of stock prices takes place throughout the stock market that results in a catastrophic loss of wealth via paper. The crashes are driven strictly by panic 9 times out of 10 a crash takes place. As a crash is happening, panic occurs; the panic keeps evolving and ends up like the snowball effect before you know it. A crash occurs when economic events take place. These events are always bad news... The behavior of traders follows, which leads to a crash when panic ensues. Crashes normally occur of a seven day period and may extend even further. Crashes happen in bear markets as the market is already weak to begin with. Once traders see a drop in prices,

The Wall Street Crash was a trigger for the collapse of the United States economy.On Tuesday the 24th of October lots of inverstors tried to sell their shares at once. this made share prices drop very fast. by the end of the day the stock exchange had lost four billion dollars. Many of the stock brokers sold shares on margin. To buy shares to begin with they had to borrow money from the banks. when the stock prices began falling the brokers needed to repay their debts to the banks. the only way to do that was if their customers payed them back. the customers had to sell their shares to pay the brokers back and they

There has been a debate for years on what caused the Financial Crisis in 2008 and if there was one main cause, or a series of unfortunate events that led to the crisis. The crisis began when the market was no longer funding many financial entities. The Federal Reserve then lowered the federal funds rate from 5.25% to almost zero percent in December 2008. The Federal Government realized that this was not enough and decided to bail out Bear Stearns, which inhibited JP Morgan Chase to buy Bear Stearns. Unfortunately Bear Stearns was not the only financial entity that needed saving, Lehman Brothers needed help as well. Lehman Brothers was twice the size of Bear Stearns and the government could not bail them out. Lehman Brothers declared bankruptcy on September 15, 2008. Lehman Brothers bankruptcy caused the market tensions to become disastrous. The Fed then had to bail out American International Group the day after Lehman Brothers failed (Poole, 2010). Some blame poor policy making and others blame the government. The main causes of the financial crisis are the deregulation of banks and bank corruption.