ECONOMICS
ENTREPRENEURS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Risk
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Loss
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Speculative Risk
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Pure Risk
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Detailed explanation-1: -Investing in the stock market is an example of a speculative risk. One can only speculate on whether the investment will produce a profit or a loss. Insuring an automobile is an example of pure risk. If the insured auto is involved in an auto accident, there is most definitely going to be some sort of damage (loss).
Detailed explanation-2: -Sports betting, investing in stocks, and buying junk bonds are some examples of activities that involve speculative risk.
Detailed explanation-3: -Gambling and investing in the stock market are two examples of speculative risks. Each offers a chance to make money, lose money or walk away even.
Detailed explanation-4: -There are no opportunities for gain or profit when pure risk is involved. Pure risk is generally prevalent in situations such as natural disasters, fires, or death. These situations cannot be predicted and are beyond anyone’s control. Pure risk is also referred to as absolute risk.