Which term refers to the amount by which the value of an asset increases or decreases compared to the amount you paid for it?

Which term refers to the amount by which the value of an asset increases or decreases compared to the amount you paid for it?

• A. Capital Asset
• B. Capital Gain and Loss
• C. Capital Appreciation and Depreciation
• D. Dividends

Answer: (C)

Value movement relative to what you paid is captured by capital appreciation and depreciation. When an asset’s value increases above your purchase price, that’s capital appreciation; when it drops below your purchase price, that’s capital depreciation. This term covers both upswings and downswings in value, which is exactly what the question is asking about. For example, buying a stock at 100 and it rises to 140 shows capital appreciation of 40; if it falls to 80, that’s capital depreciation of 20. Dividends are cash payments from profits and don’t describe change in asset value, and capital asset refers to the type of asset rather than its value movement. Capital gain and loss describes the profit or loss realized when you sell, which is related but not the ongoing change in value since purchase.

Value movement relative to what you paid is captured by capital appreciation and depreciation. When an asset’s value increases above your purchase price, that’s capital appreciation; when it drops below your purchase price, that’s capital depreciation. This term covers both upswings and downswings in value, which is exactly what the question is asking about. For example, buying a stock at 100 and it rises to 140 shows capital appreciation of 40; if it falls to 80, that’s capital depreciation of 20. Dividends are cash payments from profits and don’t describe change in asset value, and capital asset refers to the type of asset rather than its value movement. Capital gain and loss describes the profit or loss realized when you sell, which is related but not the ongoing change in value since purchase.