Q2. What are the types of Business Risk?
Ans. There are two types of business Risk:
- Speculative Risk: It involves both possibility of again as well as possibility of loss. It arises due to change in market condition such as change in prices, change in fashion and taste etc. Favorable market condition results in gains whereas unfavorable results in losses.
- Pure Risk: It involves on;y possibility of losses or no loss. the chance of fire, theft, strikes etc. are example of pure risks. Their occurrence may result in loss where as non-occurrence may result in loss.