When Shares of Stock Are Sold for More Than the Price

question 195

Multiple Choice

When shares of stock are sold for more than the price at which they were purchased, the difference received by the seller is referred to as

• A) a dividend.
• B) a capital gain.
• C) interest.
• D) economic profit.

---

Definitions:

Equity Capital

Capital acquired by a corporation in return for partial ownership of the corporation.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost liquidity.

Dividend Reinvestment Plan

A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date.

Automatic Dividend Reinvestment Plans

These plans allow shareholders to automatically reinvest their cash dividends into additional shares or fractional shares of the underlying stock on the dividend payment date.