which type of business risk involves both the possibility of gain as well as possibility of loss??

Speculative risk is the type of risk in which both the chances of profit as well as loss exists. For example, if the price of a particular good changes in favour of the producer, then he will earn profits, otherwise, he will incur losses. Therefore, the speculative risk of earning profit or incurring losses depends on the prevailing market conditions.

This kind of risk usually arises due to the uncertainty of the market conditions. Besides the market conditions, it also depends on various human as well as economic factors such as strikes, power failure, technological changes, etc.

 

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