U.S. History STAAR ( State of Texas Assessments of Academic Readiness) Practice Test

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Which of the following is NOT true about speculators?

  1. They avoid taking risks in investments

  2. They look for opportunities with high rewards

  3. They often engage in financial markets

  4. They may invest based on market predictions

The correct answer is: They avoid taking risks in investments

Speculators are known for actively seeking out investments that carry a high potential for profit, often accepting significant levels of risk in the process. Unlike conservative investors who prioritize the security of their capital, speculators thrive on the fluctuations of the market, understanding that higher risk can lead to higher rewards. They look for opportunities to buy assets at a low price, anticipating that their value will increase, and are often engaged in trading within financial markets where rapid changes can occur. By making decisions based on predictions about market movements, their approach is inherently risk-oriented. Therefore, stating that speculators avoid taking risks contradicts their fundamental nature and strategy in investment.