When an Investor Sells a Security for More Than the Purchase

question 81

Multiple Choice

When an investor sells a security for more than the purchase price, the investor earns a(n)

• A) dividend payment.
• B) appreciated interest receipt.
• C) corporate benefit.
• D) capital gain.

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Definitions:

Arithmetic Return

The simple average of periodic returns of an investment over a specified time frame.

Dollar-Weighted Return

A method of calculating an investment's return that accounts for the timing and magnitude of cash flows into and out of the investment.

Dollar-Weighted Return

A method of calculating an investment's return that considers the timing and amount of capital inflows and outflows.

Dividend

A portion of a company's earnings distributed to its shareholders, usually in the form of cash or additional stock.