What type of financial outcome occurs when a stock is sold?

When a stock is sold, the financial outcome is typically classified as a capital gain or loss. This determination is made by comparing the selling price of the stock to its purchase price. If the stock is sold for a higher price than it was purchased, the seller realizes a capital gain, which is the profit made from the sale. Conversely, if the stock is sold for less than its purchase price, a capital loss occurs, reflecting a reduction in the value of the investment.

Capital gains and losses are significant because they directly impact an investor's overall financial performance and may have tax implications. In many tax jurisdictions, capital gains may be taxed differently than ordinary income, often at lower rates, which is a critical aspect for investors to consider in their financial planning.

The other options mentioned, such as dividends, interest income, and return on investment, represent different financial concepts. Dividends are distributions of a company's earnings to its shareholders and occur independently of the sale of stock. Interest income is earned from fixed-income investments like bonds or savings accounts, not from equity transactions. Finally, return on investment is a general term that measures the efficiency of an investment or compares the profitability of different investments but does not specifically refer to selling a stock. Hence, capital gain