Calculated as the difference between a higher selling price and a lower purchase price, this profit results from the appreciation in an asset’s value.
An asset exhibiting less of this attribute can only be sold by: (1) waiting a long time, (2) discounting the price, and/or (3) incurring significant transaction costs.
A theory used to explain the term structure of interest rates, which states that the shape of the yield curve depends on investors’ expectations about future inflation rates, all else being equal.
The percentage return generated by an investment, calculated as the cash flows received from the investment (for example, interest or dividend income and capital gains) divided by the purchase price of the investment.
The chance that the return earned by a financial asset will increase or decrease due to a change in the value of an opportunity cost (market) interest rate.
A capital gain is the profit that results from the appreciation, or increase, in the value of an asset. It represents one component of the total return earned by an investment and is calculated as the difference between a higher selling price and a lower purchase price. If the selling price is less than the purchase price, then the negative profit, or loss, is referred to as a capital loss. Capital Gain/Loss=Selling Price – Purchase PriceCapital Gain/Loss=Selling Price – Purchase Price