ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Fundamental risk is risk that affects entire societies or a large population within a society. Natural disasters, such as earthquakes and hurricanes, fall into the category of fundamental risk, as do phenomena such as inflation and war, which typically affect large numbers of people.

Detailed explanation-2: -Speculative risk refers to price uncertainty and the potential for losses in investments. Assuming speculative risk is usually a choice and not the result of uncontrollable circumstances. Pure risk, in contrast, is the potential for losses where there is no viable opportunity for any gain.

Detailed explanation-3: -Pure risk is the risk involved in situations that present the opportunity for loss but no opportunity for gain.

Detailed explanation-4: -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).