Which of the following illustrates a capital gain?(1 point)

Question

Responses

An investor purchases a stock for $25 and then later sells it for $30.
An investor purchases a stock for 25 dollars and then later sells it for 30 dollars .

An investor earns a $20 return from a bond held until maturity.
An investor earns a 20 dollars return from a bond held until maturity.

An investor earns a $20 return from a savings deposit.
An investor earns a 20 dollars return from a savings deposit.

An investor purchase a stock for $30 and then later sells it for $25.
An investor purchase a stock for 30 dollars and then later sells it for 25 dollars .

Answer 1

A capital gain occurs when an investment is sold for more than its purchase price.

In this case, the correct illustration of a capital gain is:

An investor purchases a stock for $25 and then later sells it for $30.

This signifies a profit of $5, which constitutes a capital gain. The other options either describe earning interest or involve a loss, which does not represent a capital gain.