USA --> Stock Market Crash

Question 1

What is a share?

Answer 1

A share represents a percentage of ownership in a company or a financial asset. Individuals holding shares in a company are known as shareholders.

Question 2

What characterized the American stock market during the 1920s?

Answer 2

In the 1920s, the American stock market experienced a steady rise. Speculators engaged in buying shares, intending to sell them within a few weeks to make quick gains.

Question 3

How did speculators operate in the mid-1920s, and what does “buying on the margin” mean?

Answer 3

• In the mid-1920s, speculators started buying shares “on the margin,” which involved borrowing money from banks to fund the share purchases. The borrowed funds, often up to 90% of the share price, were repaid when the shares were later sold.

Question 4

What event marked the beginning of the Great Depression, and when did it occur?

Answer 4

The Great Depression began with the Stock Market Crash in October 1929. Panic selling of shares in the market led to a significant decline in stock prices.

Question 5

Provide a timeline of key events during the Stock Market Crash in October 1929.

Answer 5

• 18th October: Prices began falling.
  
  • 19th October: 3.5 million shares were sold, leading to a further fall in prices.
  • 21st October: Over 6 million shares changed hands.
  • 24th October (Black Thursday): 13 million shares were sold with no buyers.
  • 26th October: President Hoover expressed concern about the country’s fundamental business.
  • 29th October: 16 million shares were sold with no buyers, and prices on the stock market collapsed.

Question 6

What were the consequences of the Stock Market Crash?

Answer 6

The Stock Market Crash of 1929 had severe consequences, leading to the Great Depression. The crash resulted in widespread panic, a sharp decline in economic activity, and financial hardships for many individuals and businesses.