Excercise 25 Econ 417 Outline: Gambling And Stock Trading

EXCERCISE 25 ECON 417 OUTLINE
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Gambling and stock trading
Gambling and stock trading are related as they are associated with placing the financial resources at risk.
In most cases trading involves analysis, but gambling is associated more with speculation and lack whether the gambler can win or lose.
Differences
Stock mostly requires skills and research when making decisions.
Gambling is more emotional and since the expected value is likely negative gamblers tend to be more risk takers.
Similarities
Another view is that since investigating involves risk, investors are equally risk seekers.
Stock market investment may be an acceptable form of gambling, in some ways, especially when there is an excessive risk involved (Granero et al., 2012).
Even as both gambling and investing involve risk, there is a short time horizon for gamblers and stock investors also tend to focus on the long term prospects.
Speculation
Speculation links stock trading and gambling as both gamblers and stock traders speculate about the expected value of their placements.
Even when there is the possibility of loss traders and gamblers expect to better off over time, and the higher the risk the higher the return.
Traders and gamblers do not necessarily stop after a huge loss because they speculate there will be higher returns.
Risk taking
Risk taking is associated with the risk of placing huge bets in gambling with the assumption that the returns will offset any potential losses.
Similarly, for stock traders huge placement and risky investments are more common when there is excessive.
The high-risk stoc...