Kaplan SIE Complete Practice Test 2025

A bear market is defined as a market condition characterized by declining prices and increased pessimism among investors. This typically means that the overall market, such as the stock market, is experiencing a prolonged downturn, often defined as a decline of 20% or more from recent highs.

During a bear market, investors tend to lose confidence in the market's ability to recover, which can lead to further selling and exacerbate price declines. This negative sentiment can be driven by various factors, including economic downturns, high unemployment rates, or geopolitical tensions, which all contribute to the feeling that a recovery may take time or may not happen at all.

In contrast, conditions like rising prices and optimism would signify a bull market, while a lack of significant price movement suggests a stagnant or sideways market. Increased trading volume and investor confidence typically align with bullish trends rather than bearish ones. Therefore, option C accurately captures the essence of a bear market, delineating it from the other possibilities.