TeachMeFinance.com - explain speculation
speculation -- the act of knowingly investing funds in a venture carrying higher-than-average risks in the hope of making above-average profits. Speculators expect to make a profit because of price changes.
Speculation -- Dealing on expectations ; buying in expectation of an advance or selling in expectation of a decline. There is a constant, large speculation in stocks , bonds , grain, cotton and coffee. Speculative operations are conducted on margin that is, speculators deposit with the brokers who execute their orders certain amounts of money, designated as margins, which are intended to protect the brokers in case the movement of prices should be against the speculators and they (the speculators) should be unwilling or unable to make good the loss sustained. A party who purchases a stock or a commodity in anticipation of a rise and pays the full price of it is not, in the usual acceptation, engaged in speculation.
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