Jim and Paula Franklin started a dry cleaning business.The business may be successful or it may fail.The type of risk that is present when either a profit or loss could occur is called
A)pure risk.
B)subjective risk.
C)nondiversifiable risk.
D)speculative risk.

Question

Quizplus · Accepted Answer

The type of risk present when there is a possibility of profit or loss is called speculative risk. This is because the outcome is uncertain and dependent on various factors, including market conditions, competition, and other external factors. Pure risk refers to situations where only the possibility of loss exists, such as accidents, natural disasters, or illness. Subjective risk is the perceived level of risk by an individual and can vary from person to person. Nondiversifiable risk is the risk that cannot be eliminated through diversification, such as market risk or systemic risk. Therefore, the best choice in this case is D, speculative risk.

Jim and Paula Franklin Started a Dry Cleaning Business