Option A is correct.
The capital appreciation refers to the increased value of the stock.
Further Explanation:
Capital appreciation: Capital appreciation is also known as capital gain. When the market value of the investment increases, the increment is known as capital appreciation. The difference between the purchase value and sales value is considered as capital appreciation.
Capital appreciation = Sales value – Purchase value
In the current case, increment in the value of the stock is known as capital appreciation as the value of the investment has increased since the time of the purchase.
Thus, capital appreciation refers to the increased value of stock.
Justification for the correct and incorrect options:
A.
The increased value of a stock: This is the correct option.
The increase in the value of the investment is known as capital appreciation.
B.
The ability to make a profit from owning stock: This is an incorrect option.
Capital appreciation is considered as an increment in the value of the investment. It does not deal with profit making.
C.
The distribution of earnings to shareholders: This is an incorrect option.
The distribution of earning is known as a dividend.
D.
The profitable sale of shares: This is an incorrect option.
The profit on the sale of asset is known as capital gain.
Learn more:
Learn more about the factors affecting the stock price
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Learn more about the effect of the stock on the balance sheet
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Learn more about the earning per share
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Answer details:
Grade: High School
Subject: Business Studies
Chapter: Share & Debentures
Keywords: Capital appreciation, refers, stock, the value of stock, increase in the value, ability to make, profit, owning a stock, distribution, earning, shareholders, profit on sale of shares, stock, increase, in the value of asset, value increment.
