California Insurance License Exam Practice Test Practice Question
Which of the following characterizes a speculative risk?
Correct Answer: C
Rationale: Speculative risk involves situations where there is a chance for both loss and gain, making option C the most accurate choice. This contrasts with pure risks, which only present potential losses.
Option A incorrectly defines speculative risk by focusing on personal traits like carelessness, which do not inherently relate to the risk type.
Option B describes risk transfer, a strategy used in risk management, but it does not capture the essence of speculative risk itself.
Option D refers to a specific insurance policy feature, which pertains to risk management rather than the definition of speculative risk.
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