What is a bear market?

A bear market refers to a period in the financial markets during which the prices of securities are falling or are expected to fall, typically defined as a decline of 20% or more in stock prices from recent highs. This condition is often accompanied by a negative sentiment among investors, leading to a general pessimism regarding the market's prospects. This negative outlook might be driven by a variety of factors, such as poor economic indicators, geopolitical tensions, or downturns in specific sectors.

In contrast, a market characterized by rising prices would indicate a bull market, where optimism prevails and investors are willing to buy more. Stagnant prices suggest a lack of significant movements in either direction and may not indicate a bear market scenario. High trading volumes can occur in various market conditions and do not specifically correlate to whether the market is bullish or bearish. Thus, the defining characteristic of a bear market is the widespread decline in prices coupled with negative investor sentiment, making the chosen answer the most accurate description of this market condition.