What is true about speculative risk?

Speculative risk involves situations that have the potential for both positive and negative outcomes, meaning that it can lead to either gains or losses. This type of risk is inherently linked to choices made in uncertain environments, such as investments in business ventures or stock markets, where individuals or companies may stand to gain profits or incur losses based on various unpredictable factors.

Understanding speculative risk is vital in differentiating it from pure risk, which is associated solely with the possibility of loss without the chance of gain—such as the risk of property damage or injury. Unlike speculative risk, pure risk is typically the only type covered by standard insurance policies, as insurers tend to avoid underwriting speculative risks due to their uncertain nature and the potential for profitable outcomes.

The other options do not accurately represent the nature of speculative risk: it is not fully covered by insurance due to its uncertainty and opportunity for profit, it is tied to uncertainty rather than devoid of it, and it is not classified as pure risk, which only encompasses scenarios with potential loss. Thus, the characterization of speculative risk as a situation that can result in both gains and losses is the correct statement.