Speculation

[spek-yuh-LAY-shuhn]

What is the definition of Speculation?

The process of making high-risk financial transactions with the potential for significant gains, but also with a higher-than-average possibility of incurring losses.

Using Speculation in an Example

In the financial markets, speculation is often seen when investors buy volatile stocks or commodities with the hope that their prices will rise quickly, despite the risk of substantial losses.

Using Speculation in a sentence

During the meeting, the trader explained his speculation strategy, emphasizing the potential high returns, despite the risks involved.

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A financial contract in which two parties agree to exchange streams of payments over a specified period, based on different indices such as interest rates, foreign exchange rates, or equity indices, applied to a notional amount. Swaps typically do not involve the exchange of principal.

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