Successful financial management requires knowledge of not only the terminology, mathematics, and techniques of financial management, but also that

of human psychology and sociology. Financial and economic history in general$-$and market bubbles in particular$-$are filled with examples of both

rational and irrational behaviors. Which of the following behaviors are true characterizations of a market bubble and which are false?

Behavior

Early in the development of a market bubble, asset prices are affected more by the trading behaviors of long$-$term, experienced

and knowledgeable market participants rather than from the activities of inexperienced and naive buyers and sellers.

Throughout the bubble, asset market prices never exceed their intrinsic value

Extremely high trading volumes vis$-$a$-$vis historical averages