Speculative Risk

What is 'Speculative Risk'

Speculative risk is a category of risk that, when undertaken, results in an uncertain degree of gain or loss. All speculative risks are made as conscious choices and are not just a result of uncontrollable circumstances.

Speculative risk is the opposite of pure risk.

BREAKING DOWN 'Speculative Risk'

By definition, almost all investment activities involve speculative risks, as an investor has no idea whether an investment will be a blazing success or an utter failure. However, some investments are more speculative than others. For example, investing in government bonds has much less speculative risk than investing in junk bonds, because government bonds have a much lower risk of default.

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  1. Speculation

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RELATED FAQS
  1. What is the difference between investing and speculating?

    The main difference between speculating and investing is the amount of of risk undertaken in the trade. Typically, high-risk ... Read Answer >>
  2. Do speculators have a destabilizing effect on the financial system?

    A speculator is anyone who trades derivatives, commodities, bonds, equities or currencies with higher-than-average risk in ... Read Answer >>
  3. How are risk profiles and speculation related?

    Learn more about risk profiles and speculation, why speculators should assess their risk profiles and how risk profiles and ... Read Answer >>
  4. What is the difference between speculation and gambling?

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