Basics Intermediate: Understanding Bull and Bear Markets

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1.
A portfolio with a lot of stocks can be very profitable during a bull market.
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True. Stocks are able to take advantage of growth because they are made of shares, which typically grow in value during bull markets.
2.
Why do bonds perform well during bear markets?
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Their returns stay the same. Bond returns are fixed no matter what the market. They can't rise or fall.
3.
Selling short involves _______.
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Selling when prices are high and buying when prices fall. This is the reverse of the buy low, sell high strategy. It attempts to take advantage of falling prices.
4.
The net advance measures the difference between the number of stocks advancing in price and the number declining in price.
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True. From this comes the advance-decline line.
5.
Emotions can contribute to bull and bear markets.
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True. Aspects of investor psychology, such as emotions, can drive people to value stocks very high or very low.