What distinguishes a "bull market" from a "bear market"?

A bull market is defined by a significant period of rising prices, typically by 20% or more from recent lows. This environment reflects strong investor confidence, increasing economic indicators, and robust corporate profitability. Generally, during a bull market, the overall sentiment leans towards optimism, encouraging more investment and higher stock prices.

In contrast, a bear market is characterized by falling prices, usually a decline of 20% or more from recent highs. This scenario arises when there is a general downturn in economic activity or investor malaise, leading to pessimism and decreased investment.

Understanding these concepts is vital for investors and finance professionals, as identifying the market type can influence strategies for investing, risk management, and overall market participation. The option describing a bull market as one with rising prices and a bear market as one with falling prices accurately captures the fundamental characteristics that define these market conditions.