examples of pure and speculative risks
Example of a pure risk situation - A car may meet with an accident or it may not meet with an accident. If the insurance policy is bought for the purpose, then if accident does not occur, there is no gain to the insured. On the contrary, if the accident occurs, the insurance company will indemnify the loss.
Example of a speculative risk situation - A person invests in stock market. He may either gain or lose money in it, or, he may simply incur no losses or gain no profit if the prices of the stock do not fluctuate.
Example of a speculative risk situation - A person invests in stock market. He may either gain or lose money in it, or, he may simply incur no losses or gain no profit if the prices of the stock do not fluctuate.