Speculative Risk


DEFINITION of 'Speculative Risk'

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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