Which of the following characterizes a bear market?

A bear market is characterized by a prolonged period of declining stock prices, typically defined as a drop of 20% or more from recent highs. This decline often reflects broader economic challenges, investor pessimism, and a lack of confidence in the market's performance. During a bear market, investors may become fearful of further losses, leading to decreased buying activity and increased selling pressure, which continues to drive stock prices lower.

In contrast, rising stock prices indicate a bull market, where investor confidence is high, and economic conditions are generally favorable. Stable economic conditions suggest a balanced market without significant fluctuations in performance, which does not align with the characteristics of a bear market. Lastly, increased investor confidence typically correlates with rising prices and positive market sentiment, further diverging from the characteristics observed in a bear market. Thus, the defining feature of a bear market is indeed the decline in stock prices.