Problem
A. What were the key events and characteristics of the 1987 stock market crash? Discuss the market behavior throughout the year and the historic collapse on October 19, 1987.
B. What were the different explanations put forth for the 1987 stock market crash? Discuss the lack of consensus among market professionals and the absence of a widely accepted explanation.
C. How did the 1987 stock market crash challenge the efficient market hypothesis (EMH)? Discuss the implications of the crash for the belief in market efficiency.
D. What is the significance of the 1987 stock market crash in the development of behavioral finance? Discuss how the crash contributed to the recognition of psychological factors in financial decision-making.
E. Discuss the lasting impact of the 1987 stock market crash on financial markets and investor behavior. Analyze the lessons learned from the crash and the changes it brought about in market participants' approach to risk management.