Account Types
An investor realizes a capital gain when:
Capital gain = sale price > cost basis. Unrealized gain = value up but not sold yet.
Complete Analysis & Legal Rationale
A capital gain is realized when an investor sells a security for more than its cost basis (original purchase price plus adjustments). Unrealized gains (price appreciation while still holding) are not taxable until the security is sold.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
This describes an unrealized gain, not a realized capital gain.
Matches the verified teaching point in the explanation.
Dividends are dividend income, not capital gains.
Interest income is ordinary income, not capital gains.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.