For example, say you purchase a share for $10, which pays a dividend of a $1 per share each year, and is now trading at $15 per share a year later. Your capital appreciation in the investment is $5, or 50%, as the price of the share has increased $5 over your purchase price or cost basis. Your interest income return is $1, or 10%, for a total return on the shares is $6 or 60%.
Capital appreciation is often a stated investment goal of many mutual funds. These funds look to find investments that will rise in value based on increased earnings or other fundamental metrics. Investments targeted for capital appreciation tend have more risk than assets chosen for capital preservation and income generation, such as government, municipal bonds, or dividend-paying stocks. Because of this, capital appreciation funds are considered appropriate for risk-tolerant investors.
Investment dictionary. Academic. 2012.
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capital appreciation — See: capital growth This occurs when the market value of the shares exceeds the purchase price. London Stock Exchange Glossary * * * capital appreciation capital appreciation ➔ appreciation * * * capital appreciation UK US noun [U] (also capital… … Financial and business terms
capital appreciation — /ˌkæpətl əprisiˈeɪʃən/ (say .kapuhtl uhpreesee ayshuhn) noun an increase in the value of an asset over a period of time … Australian English dictionary
capital appreciation — Fin the increase in a company’s or individual’s wealth … The ultimate business dictionary
capital appreciation bond — ( CAB) Securities that are issued at par, but which do not remit interest to the holder until maturity. The interest accrues at the coupon rate and is compounded at a stated rate. The issuer holds the accumulated, compounded interest until the… … Financial and business terms
Capital Appreciation Fund — A mutual fund that attempts to increase asset value primarily through investments in growth stocks. The heavy investment in growth stocks increases the risk associated with these types of funds. Also called aggressive growth fund . As its name… … Investment dictionary
capital appreciation fund — See: aggressive growth mutual fund … Financial and business terms
capital appreciation fund — Fin a mutual fund that aims to increase the value of its holdings without regard to the provision of income to its owners … The ultimate business dictionary
appreciation — Increase in the value of an asset. Bloomberg Financial Dictionary A rise in a currency s value. Chicago Mercantile Exchange Glossary * * * appreciation ap‧pre‧ci‧a‧tion [əˌpriːʆiˈeɪʆn] noun [uncountable] 1. FINANCE an increase in the value of… … Financial and business terms
capital growth — The increase in an asset s market price. Also called capital appreciation. Bloomberg Financial Dictionary The increase in value of assets and investments. Financial Services Glossary * * * capital growth capital growth ➔ growth * * * capital… … Financial and business terms
appreciation — [[t]əpri͟ːʃie͟ɪʃ(ə)n[/t]] appreciations 1) N SING: also no det, oft N of n Appreciation of something is the recognition and enjoyment of its good qualities. ...an investigation into children s understanding and appreciation of art... Brian… … English dictionary