What does the term "speculative risk" refer to?

The term "speculative risk" refers to a situation where there is a possibility of both loss and gain. This type of risk is characterized by uncertainty regarding both the outcome and the potential benefits associated with that outcome. Unlike pure risks, which only expose one to the possibility of loss with no potential for gain, speculative risks allow individuals or businesses to take chances that could lead to profit. Examples include investing in stocks or starting a business, where the outcome can lead to financial gain or a financial loss. The distinction is essential, particularly in insurance and finance, as it influences how risks are managed and assessed.

The other options do not accurately capture the essence of speculative risk, as they either describe scenarios that don't involve potential gains or mischaracterize the nature of the risk itself.