Which risk arise due to changes in the market conditions, including fluctuations in demand and supply, changes in prices or changes in fashion and tastes of customers?

Speculative risk

The correct answer is option 3- Speculative risk.

Business enterprises constantly face two types of risk: speculative and pure.

Speculative risks involve both the possibility of gain, as well as, the possibility of loss. Speculative risks arise due to changes in market conditions, including fluctuations in demand and supply, changes in prices or changes in fashion and tastes of customers. Favourable market conditions are likely to result in gains, whereas, unfavourable ones may result in losses.