What are speculative risk and pure risk? What will be an ideal respon

QUESTION

What are speculative risk and pure risk?

What will be an ideal response?

ANSWER

Answer: Speculative risk involves a chance of either gain or loss. Pure risk involves a chance for either loss or no loss; there is no possibility of gain.
Explanation: Speculative risk is the kind of risk that a company takes when it introduces a new product, which may make the firm a profit or may lose money. An example of a pure risk is constructing a building for your company—you are risking its loss from fire, flood, or whatever, but there is no way you can gain from these disasters.