MARKET CORRECTION Meaning and
Definition
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Market correction is a term used in financial markets to describe a temporary reversal or adjustment in the price of an asset, such as stocks, bonds, or commodities, to restore equilibrium after a significant and prolonged upward or downward movement. It refers to a natural fluctuation that occurs as a response to the prevailing economic conditions, investor sentiment, or other external factors that impact the supply and demand dynamics of an asset.
When the prices of securities or commodities experience an extended period of either substantial gains or losses, the market correction aims to bring the prices back to their intrinsic value or a more sustainable level. This correction occurs due to profit-taking, reevaluation of the asset's worth, or a reassessment of market conditions by investors.
Market corrections can be triggered by various factors, such as economic indicators, geopolitical tensions, changes in interest rates, or unexpected events. They are generally considered healthy and necessary for an efficient and stable market, helping to prevent excessive speculation or the formation of market bubbles.
In practical terms, market corrections often result in stock market declines of at least 10% or more from recent highs. However, the actual extent of the correction can vary depending on the severity of the preceding price movement and the impact of the underlying factors.
Common Misspellings for MARKET CORRECTION
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Etymology of MARKET CORRECTION
The term "market correction" originated from the field of finance and economics. The word "market" refers to the arena where financial transactions take place, involving the buying and selling of goods, services, or assets. "Correction" means an adjustment made to rectify an error, deviation, or imbalance.
The etymology of the word "market" can be traced back to the Latin word "mercatus", which means "trading, buying or selling". It evolved into the Old French term "marchiet" or "marchié", meaning "a marketplace". Over time, it passed into Middle English as "market".
The term "correction" has Latin roots, deriving from the word "corrigere", meaning "to make straight, set right". It entered Old French as "correcion" and Middle English as "correction", emphasizing the idea of rectifying or adjusting something.
