Which of the Following Factors Contributed to the Crash of 1987

question 24

Multiple Choice

Which of the following factors contributed to the Crash of 1987?
I. irrational investors
II. program trading
III. panic selling
IV. price uncertainty

• A)II and IV only
• B)I, II, and III only
• C)I, II, and IV only
• D)II, III, and IV only
• E)I, II, III, and IV

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Definitions:

Fair Value

The amount of money one would expect to obtain from selling an asset or the cost incurred to settle a liability, during a structured exchange between parties in the market, as of the valuation date.

Double-Declining-Balance

A method of accelerated depreciation that doubles the normal depreciation rate, reducing the book value of assets more quickly in the early years.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, which reflects the loss in value due to usage, wear and tear, or obsolescence.

Residual Value

The forecasted price an asset is likely to command at the end of its usefulness.