CARD Q002
Which situation illustrates pure risk?
- A currency trade may produce a gain
- A worker may suffer a disabling injury
- A business may earn a larger profit
- A stock investment may gain value
A worker may suffer a disabling injury
Pure risk involves loss or no loss, without an opportunity for gain. Speculative risk includes a possibility of profit.
Why each choice is right or wrong
A. A currency trade may produce a gain
Incorrect. A currency trade can produce a gain or loss, making the risk speculative.
B. A worker may suffer a disabling injury
Correct. Pure risk involves loss or no loss, without an opportunity for gain. Speculative risk includes a possibility of profit.
C. A business may earn a larger profit
Incorrect. The possibility of additional profit is speculative risk.
D. A stock investment may gain value
Incorrect. A stock investment has an opportunity for gain as well as loss.
Review the related terms
Use these lessons to revisit the concepts and try additional practice questions.