The History of Stock Market Crashes
The word covers many different days, which is why the news uses the same names for very different days.
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1.What is a crash, as the video defines it?
The word covers many different days, which is why the news uses the same names for very different days.
2.How did buyers often pay for stocks in the boom before the crash?
Buyers often put down about 10 percent and borrowed the rest. Credit also got costlier: by August 1929 the discount rate had been raised to 6 percent.
3.Leo buys 800 dollars of stock with 80 dollars of his own money. The stock falls 15 percent. What happens to his own money?
Leo's stock is worth 680 dollars, but 720 are owed. His own money is gone, and he is 40 short. That is leverage: a small push moves a big load, in both directions.
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