What characterizes pure risk?

Pure risk is characterized specifically by the possibility of loss or no loss, without any potential for gain. This type of risk is typically associated with situations where there is a chance of a negative outcome, but not a chance for profit or gain. For instance, an example of pure risk could be the risk of a house burning down. In this scenario, the homeowner could either face a loss (due to the fire) or experience no impact at all (if the house remains intact), but there is no scenario in which they would profit from this risk.

Regarding the other choices, the presence of profit and loss indicates speculative risk, which is not applicable here. Guaranteed returns are unrealistic in the context of risk assessment, as any investment carries some degree of uncertainty. Lastly, mentioning higher volatility pertains more to speculative investments where outcomes vary widely; pure risk remains static in its definition, focusing solely on loss or no loss outcomes. The distinctive trait of pure risk is its lack of prospects for gain, which is why the identification of it as the possibility of loss or no loss is correct.