Speculative risk

By | 2017-09-13T15:40:56+00:00 13th September 2017|

Speculative risk is a class of risk with an unpredictable degree of gain or loss. As an example, government bonds have low speculative risk because the risk of those bonds defaulting is low. All speculative risks are informed choices and are not just the consequence of uncontrollable circumstances. Speculative risk is the opposite of pure risk. Almost all financial market activities involve speculative risks, as an investor has no idea whether an investment will be a significant success or an ignominous failure.