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

Question

Responses

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 .

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.

Answer 1

A capital gain occurs when an investor sells an asset for more than the purchase price, resulting in a profit.

From the options provided, the correct illustration of a capital gain is:

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

This scenario shows that the investor bought the stock at a lower price and sold it at a higher price, resulting in a capital gain of $5.