What defines a speculative investment?

A speculative investment is characterized by a high level of risk, as it is typically made with the expectation of achieving a substantial profit in a relatively short period. Investors engaging in speculative investments are often willing to take on the uncertainty and volatility associated with these types of assets, such as stocks of emerging companies, cryptocurrencies, or commodities. They hope to capitalize on market swings, trends, or new opportunities that they believe could yield significant returns.

This approach contrasts with investments that are low-risk or focused on steady growth and income, which tend to prioritize stability and conservative returns over the potential for rapid gains. Speculative investments do not guarantee returns and are not typically centered on generating consistent dividend income or providing assured yields, which aligns with the definitions of the other options provided.