Pure Risk Definition help

[LostDollar]

examFX glossary

Risk, Pure The uncertainty or chance of a loss occurring in a situation that can only result in a loss or no change.

This one confuses me and I can't get its picture in my head.

Can someone offer a more clear explanation of what they are trying to say?

Thanks.

 

[leevena]

examFX glossary

Risk, Pure The uncertainty or chance of a loss occurring in a situation that can only result in a loss or no change.

This one confuses me and I can't get its picture in my head.

Can someone offer a more clear explanation of what they are trying to say?

Thanks.

Pure risk means a loss only, no chance of a gain. Think of homeowners (insure against a loss) insurance, you pay for the coverage and that money is gone.

Speculative risk has loss and gain. Think of investing, you can lose, but you can also gain.

Does this help?

 

[LostDollar]

The definition talks about loss and then throws the words or no change on the end of the sentence.

That baffles me and I'm not being able to make it make sense to me.

 

[VolAgent]

Right, because it is a risk. Your house may burn down and it may not. So at the end of the period, there may be a loss or there may be no change.

 

[LostDollar]

ok.

My brain is just not making a relationship between risk, loss, and no-change.

Maybe on another day. Right now I will just have to use kgmom's favorite maxim and move on.

Thank you both for responding.