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Hey everyone.
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Today, we're solving problem number 16 from chapter 17 of the textbook, which asks us to define a capital gain.
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So i'm just going to read this paragraph.
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When a firm decides to issue stock and must recognize that investors will expect to receive a rate of return.
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The rate of return can come in two forms.
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A firm can make a direct payment to a shareholders called a dividend.
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Alternatively, a financial investor might buy a share of stock in walmart.
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And then later sell it to someone else for $60 or a $15 gain.
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We call the increase in the stock value or of any asset between the one buys and sells it a capital gain.
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So simply put, a capital gain is a financial gain, but obviously i'm going to describe it a little more.
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And using the scenario given for buying a share of stock in walmart, you could buy it for 45 and then get $60 back.
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You know, that's $15 gain...