What is meant by 'capital gains'?

Capital gains refer to the profit realized when an individual or entity sells an asset, such as stocks, real estate, or other investments, for a price that exceeds the asset's original purchase price. This concept is fundamental in financial management and investment strategies, as it reflects the growth or appreciation of the asset over time.

The appreciation signifies a successful investment, where the seller has effectively increased their wealth by capitalizing on the asset's increased value. Understanding capital gains is crucial for investors, as these profits typically have tax implications, which can vary based on how long the asset was held before selling. Generally, long-term capital gains, for assets held for over a year, are often taxed at a lower rate compared to short-term capital gains.

In the context of the other options, income from dividends or interest payments, revenue from business operations, and losses from selling assets represent different financial concepts that do not define capital gains. While they are important in their own right, they pertain to ongoing income, operational performance, and losses, respectively, rather than the specific nature of profit achieved through the sale of appreciated assets.