Question

Which was a cause of the stock market crash in 1929?

Answer 1

Best answer: Investors bought stocks on credit because they thought prices would continue rising.

Explanation:

There was much speculative buying on the stock market in "the Roaring '20s," as the decade was known.  In the 1920s, people were so eager to invest and earn profits through the stock market that they bought stocks "on margin."  In other words, they paid for only a marginal percentage of the stocks with their own funds, and borrowed bank funds for the rest of the purchase.  By the late 1920s, 90% of the purchase price of stocks was being made with borrowed money.  This inflated the market in a way that spiraled out of control, and in 1929 the market crashed.

Answer 2

The best option here is

Investors bought stocks on credit because they thought prices would continue rising.

There was the practice of buying stocks on credit, on  a margin to make a profit, which led to over borrowing and inability to pay the loans.