Which of the following is a characteristic of speculative risk?

Speculative risk is uniquely characterized by the potential for both loss and gain. Unlike pure risk, which involves scenarios where there is only the possibility of loss (such as in situations like fire damage or liability claims), speculative risk allows for outcomes that can lead to profit or benefit, as well as losses.

An example of speculative risk is investing in the stock market: potential gains could manifest as increased share value, while potential losses could occur if the stock price falls. This inherent duality of outcomes—where both profit and loss are possible—distinguishes speculative risk from other forms of risk, which often involve only negative consequences. Understanding this characteristic is crucial for individuals and businesses as they assess their risk exposure and engage in decision-making processes that might involve taking calculated risks for potential rewards.