Question

3. Let's assume you purchase 100 shares of XYZ Company for $1 per share. After three months, the share price increases to $5. This means the value of the investment has increased from $100 to $500, for a capital gain of $____

Answer 1

400

Explanation:

The initial value of the investment is 100 *1 = $100

The final value of the investment after three months is 100 * 5 = $500

This means the value of the investment has increased from $100 to $500. The capital gain is the increase in the value of an investment;

500 - 100 = $400