Which of the following best describes a market condition where prices are expected to fall?

A bear market is characterized by a significant decline in asset prices, typically defined as a drop of 20% or more from recent highs. This condition reflects widespread pessimism and can create a self-sustaining cycle as investors anticipate further price decreases, leading to reduced investment activity and selling pressure. In this environment, investors may expect or fear that prices will continue to fall, which aligns with the essence of a bear market.

In contrast, a bull market refers to a period of rising prices and optimism among investors, while a stagnant market indicates little to no price movement, often suggesting stability rather than a downward trend. A volatile market, on the other hand, involves rapid and unpredictable price changes, which can be upward or downward, but does not specifically signify a consistent expectation of price declines. Thus, the term that best captures a situation where prices are expected to fall is indeed the bear market.