💥Join UPSC 2027,2028 Mentorship (June Batch) + Access XFactor Notes & Microthemes PDF

In the parlance of financial investments, the term ‘bear’ denotes

In the parlance of financial investments, the term ‘bear’ denotes

(a)

An investor who feels that the price of a particular security is going to fall

(b)

An investor who expects the price of particular shares to rise

(c)

A shareholder or a bondholder who has an interest in a company, financial or otherwise

(d)

Any lender, whether by making a loan or buying a bond

Answer:

(a)

Core Books/NCERT

Explanation

In the context of financial investments, the term `bear` denotes an investor who feels that the price of a particular security, such as a stock or bond, is going to fall. Such investors are sometimes called “bearish” because they believe that the market is headed for a downturn or that a particular security is overvalued and due for a correction. Bears may sell short a security, which involves borrowing shares and selling them in the expectation that they can be bought back at a lower price to repay the loan. This can be a profitable strategy if the investor`s bearish outlook is correct, but it also involves significant risk if the market moves in the opposite direction.