If Raoul purchases a share of stock for $40 and four years later sells it for $160, he will realize a
A) dividend of $120.
B) dividend of $200.
C) capital gain of $120.
D) capital gain of $160.

Question

Quizplus · Accepted Answer

Raoul's profit from selling the stock is $160 - $40 = $120, which is a capital gain. Dividends are payments that a company makes to its shareholders, usually on a regular basis, out of its profits. Raoul's purchase and sale of the stock does not involve any dividends. Therefore, options A and B are incorrect.

If Raoul Purchases a Share of Stock for $40 and Four