The profit realized when the market value of an investment increases is known as which of the following?

Question

Quizplus · Accepted Answer

Capital gains refer to the profit made when the market value of an investment increases. This profit is realized only when the investment is sold at a higher price than the purchase price. Therefore, option A is the correct choice. Option B (Asset allocation) refers to the way an investor divides his/her portfolio across different asset classes such as stocks, bonds, and cash. Option C (Diversification) refers to spreading an investment across different types of assets or securities to reduce the risk of loss. Option D (Price appreciation) is similar to Capital gains, but it refers to the increase in the market value of an asset over a period of time. Option E (Profiteering) has negative connotations and refers to making excessive profits at the expense of others.

The Profit Realized When the Market Value of an Investment