Final answer:
Under FINRA's Uniform Practice Rules, a buy-in can result in a gain if the market price has increased since the original contract, and this gain is the difference paid by the original seller. In corporate stock transactions, companies do not receive financial returns from secondary market trades, such as when stock is bought and sold between investors. Capital gains are profits from the increase in stock value between buying and selling it.
Step-by-step explanation:
The question concerns the outcome of a buy-in under the Financial Industry Regulatory Authority's (FINRA) Uniform Practice Rules. A buy-in occurs when a seller fails to deliver securities within the prescribed time, and the buying party takes action to purchase the securities from another source, typically at the market price. If the market price has risen since the original contract was made, the original seller must bear the cost difference, which can result in a financial gain for the buying party.
When it comes to investing in corporate stocks like General Motors or Wal-Mart, it is crucial to understand that a company does not benefit financially from the secondary market transactions. Any capital gain you achieve from buying and selling stock is a result of the change in stock value between the purchase and sale, and not from any monetary transaction with the company.
For example, you might purchase Wal-Mart stock at $45 and sell it later for $60, netting a $15 gain. This gain is known as a capital gain.