Question

which of the following scenarios describes a capital gain? a.) an investor who owned this item from a company has limited voting rights on major company issues. b.) a company paid an investor $.50 per share from its earnings each quarter. c.) an investor earned this when he sold shares at a higher price than he purchased the shares. d.) a company forced an investor to pay back her 200 shares of this item.

Explanation:

A capital gain occurs when an asset is sold at a higher price than its purchase - price. Option a describes a feature of an investment related to voting rights, option b is about dividends, and option d is about share - recall by a company. Only option c describes the situation of selling shares at a higher price than the purchase price, which is a capital gain.

Answer:

C. An investor earned this when he sold shares at a higher price than he purchased the shares.