Final answer:
When the fair value of a company's portfolio of passive investments in marketable equity securities exceeds its book value, it is referred to as a gain in fair value.
Step-by-step explanation:
When the fair value of a company's portfolio of passive investments in marketable equity securities exceeds its book value, the difference is referred to as a gain in fair value. This occurs when the market value of the securities increases, resulting in a higher fair value than the original cost recorded in the company's books. For example, let's say a company purchased 100 shares of a stock at $10 per share, resulting in a book value of $1,000. If the market price of the stock later increases to $15 per share, the fair value of the investment would be $1,500. The difference of $500 ($1,500 fair value - $1,000 book value) represents a gain in fair value.