The distinction between “pure risk” and “speculative risk” is important because only pure risks are normally insurable. Why is the distinction between “fundamental risk” and “particular risk” important
The distinction between “pure risk” and “speculative risk” is important because only pure risks are normally insurable. Why is the distinction between “fundamental risk” and “particular risk” important
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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- The distinction between “pure risk” and “speculative risk” is important because only pure risks are normally insurable. Why is the distinction between “fundamental risk” and “particular risk” important?
Transcribed Image Text:The distinction between pure and speculative
risks is an important one, because normally only
pure risks are insurable. Insurance is not concerned
with the protection of individuals against those
losses arising out of speculative risks. Speculative
risk is voluntarily accepted because of its two-
dimensional nature, which includes the possibility
of gain. Not all pure risks are insurable, and a fur-
ther distinction between insurable and uninsurable
pure risks may also be made. A discussion of this
difference will be delayed until Chapter 2.
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