Define "capital gains."

Capital gains refer specifically to the profit made from the sale of an asset when it is sold for more than its purchase price. This definition encompasses various types of assets, including stocks, real estate, and other investments. When an asset appreciates in value and is sold for a higher price than it was acquired, the difference between the sale price and the purchase price is what constitutes the capital gain.

This concept is essential in investments, as it illustrates how an asset's increase in value can generate wealth for the seller. Additionally, capital gains can be subject to taxation, depending on how long the asset has been held – distinguished between short-term and long-term capital gains.

Other options relate to different aspects of finance, such as rental income or dividends to shareholders, neither of which directly describes capital gains. Additionally, losses incurred from asset sales are termed capital losses, which involve selling an asset for less than its purchase price and are not applicable when defining capital gains.