What type of risk includes scenarios where there can be profit or loss?

The correct answer identifies speculative risk, which encompasses situations where outcomes can lead to either profit or loss. This type of risk is typically associated with investments or business ventures that involve the potential for gain or loss based on future events that are uncertain.

Speculative risks contrast with pure risks, which involve scenarios that can only result in a loss or no change (such as natural disasters or theft), making it a one-sided scenario without the potential for gain. Market risk refers specifically to uncertainties in the financial markets that can affect the value of investments, while investment risk is a broader term that includes both pure and speculative risks associated specifically with making investments. Speculative risk, therefore, is the most fitting choice when considering situations where one can expect both potential profits and losses.