Encyclopedia of Investment Terminology

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Stock Market Crash

In a stock market crash, a massive decline in stock prices will occur suddenly. This generally works in cases where people are confident with the values of their stocks and will sell their stocks to get their profits. A crash can also happen when the price-to-earnings ratio of an index is greater than its original long term projection. Examples of stock market crashes include the Black Monday crash on October 19, 1987, where the Dow Jones fell by more than five hundred points.

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