Which of the following statements is true of a capital gain?

Question

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A capital gain is the profit earned from selling an investment for more than its cost basis. This is a type of return on investment for common stockholders. Preferred stockholders may receive dividends as a return on their investment but do not typically participate in capital gains. Capital gains are not usually a stated amount and are instead dependent on market conditions and the timing of the sale of the investment. Interest paid on a bond is not a capital gain, but rather a form of regular income for the bondholder.

Which of the Following Statements Is True of a Capital