Contacts
Capital gain
11 august 2021
Capital gain is the profit that we get by buying something at a certain price and then selling it at a price higher than the price for which we bought it.
Example:
We buy 10 shares in Daimler AG - the car manufacturer Mercedes-Benz - at a price of $55 per share. The total purchase price is $550. We paid $8 commission to the broker on the purchase.
Two months later, Daimler AG reports very strong sales of its new S-class model. Shares of the company rise to $65 per share. We decide to sell by paying an $8 commission to the broker on the sale. Let's see what happens:
Buying
10 shares x $55 = $550
+
$8 commission purchase
$ 558 purchase price
Sale
10 shares at $65 = $650
-
$8 commission sale
$642 sale price
$642 - $558 = $84 capital gain
