Which risk involves outcomes that can include both loss and gain?

Speculative risk refers to situations where the outcomes can vary, leading to both potential gains and losses. This type of risk typically involves investments or entrepreneurial endeavors, where individuals or businesses assume uncertainty in hopes of generating profit. For example, investing in stocks can result in either a financial gain if the stock price rises or a financial loss if it falls.

In contrast, pure risk is characterized by situations that only lead to a possibility of loss without the chance for gain, such as the risk of fire damage to property or the risk of natural disasters. Liability risk pertains to the exposure to legal action for damages due to harm caused to others, which also falls under pure risk because it does not include opportunities for profit. Property risk focuses on the potential for loss or damage to physical assets, similar to pure risk, as it involves the loss of value without potential for gain from the risk itself. Hence, speculative risk is distinct because it encompasses both positive and negative outcomes, making it the correct choice.