Answer to Question #155991 in Microeconomics for Noushin

Question

An analyst remarked that economic booms are always accompanied by fraud, which is revealed

when the boom is over and the share values are falling.

- Why are frauds easier to carry out during a share market boom and more likely to be

exposed during a share market downturn?

Answer 1

This is because they make good advertisment attracting more people .They lure people in by encouraging them to invest with low down payments expecting higher returns hence they enjoy higher quick profits and therefore they cannot notice frauders at first. When stock market start to fall thats when they start noticing that there is a problem and by the time they withdraw from the marker it is already too late.