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Zorluk: ZorDefinition and Types of Risk

An agricultural commodities broker enters into a futures contract to purchase 10,000 bushels of wheat at a set price, intending to profit from anticipated market fluctuations. To protect against the possibility that the market price drops below the contract price, the broker seeks an insurance policy. Under foundational insurance principles, the broker's exposure to market price fluctuation is classified as a pure risk.

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Cevap

False
The exposure described is a speculative risk because the broker stands to either gain a profit or suffer a loss depending on future market movements. Pure risks, which are the primary subject of insurance contracts, only involve the possibility of loss or no loss.

Adım Adım Çözüm

1
Identify the nature of the exposure described in the scenario.
The exposure is the market price fluctuation resulting from a commodities futures contract.
Understanding the exact source and nature of the risk is required for proper classification.
2
Evaluate the possible financial outcomes of the identified exposure.
The broker could experience a financial loss (if the price drops) or a financial gain (if the price rises).
The distinction between primary risk types depends entirely on their potential outcomes.
3
Apply the definitions of pure and speculative risks to the outcomes.
Because there is a clear possibility of financial gain, the risk must be classified as speculative, not pure.
Pure risk only allows for the possibility of loss or no loss, whereas speculative risk involves the chance of gain.

Anahtar Kavram

Distinguishing Between Pure and Speculative Risks
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Konular

Definition and Types of Risk

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