Q.Write a short note on: Speculation

Speculation is buying or selling now in anticipation of a future change in price, so as to profit from the price change.

Explanation

Speculation refers to transactions undertaken in the present on the basis of expected future price changes. A speculator buys a commodity (or asset) when he expects its price to rise and sells it when he expects its price to fall, hoping to earn a profit from the difference. In the theory of demand, if consumers expect the price of a good to rise in the near future, they increase their present purchases (speculative demand rises); if they expect prices to fall, they postpone purchases and present demand falls. Thus expectations and specu …