Paper Profit (Paper Loss)

Paper Profit (Paper Loss)
Unrealized capital gain (or capital loss) in an investment. It is calculated by comparing the market price of a security to the original purchase price. Gains or losses only become realized when the security is sold.

Investors commonly justify bad investment decisions because of paper gains or losses. Two examples:

1. Although you officially recognize a transaction when you sell a security, many investors believe they haven't lost any money in a sinking investment because they haven't yet sold it. While you don't have a capital loss for tax purposes, there is a loss in value.

2. On the flip side, the dotcom boom saw many "paper millionaires"; created due to stock options. The problem was that rules in options contracts made it impossible for these people to sell their stock and realize their wealth. Consequently, after the dotcom market crashed, many paper millionaires went broke.


Investment dictionary. . 2012.

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Look at other dictionaries:

  • paper profit or loss — An unrealized profit (or loss) on a security or other investment still held. Paper profits (or losses) become realized profits (or losses) only upon the sale of the security + paper profit Profit not yet realized as derived from an appreciation… …   Black's law dictionary

  • paper profit or loss — n. Profit or loss that exists on the books but has not been converted into cash. The Essential Law Dictionary. Sphinx Publishing, An imprint of Sourcebooks, Inc. Amy Hackney Blackwell. 2008 …   Law dictionary

  • paper loss — paper profit or loss An unrealized profit (or loss) on a security or other investment still held. Paper profits (or losses) become realized profits (or losses) only upon the sale of the security + paper profit Profit not yet realized as derived… …   Black's law dictionary

  • paper loss — noun an unrealized loss on an investment calculated by subtracting the current market price from the investor s cost • Ant: ↑paper profit • Hypernyms: ↑loss, ↑red ink, ↑red * * * paper loss, a loss existing on paper, but not yet realized. A… …   Useful english dictionary

  • unrealized profit or loss — n. Profit or loss that has not yet been converted into actual money, existing only in principle or “on paper,” such as a rise or loss in stock prices. The Essential Law Dictionary. Sphinx Publishing, An imprint of Sourcebooks, Inc. Amy Hackney… …   Law dictionary

  • unrealized profit or loss — A profit or loss that has not yet materialized. An example of an unrealized profit would be in the appreciation of stock. Although the stock price has increased, if the stock is not sold, the profit is considered a paper profit or unrealized… …   Black's law dictionary

  • paper loss — /peɪpə ˈlɒs/ (say paypuh los) noun a capital loss in an investment that is failing which has not yet been converted into an actual loss by selling the security in question. Compare paper profit …  

  • paper profit — or loss An unrealized profit (or loss) on a security or other investment still held. Paper profits (or losses) become realized profits (or losses) only upon the sale of the security + paper profit Profit not yet realized as derived from an… …   Black's law dictionary

  • profit — Most commonly, the gross proceeds of a business transaction less the costs of the transaction; i.e. net proceeds. Excess of revenues over expenses for a transaction; sometimes used synonymously with net income for the period. Gain realized from… …   Black's law dictionary

  • loss — The opposite of gain. Bloomberg Financial Dictionary * * * loss loss [lɒs ǁ lɒːs] noun 1. [countable, uncountable] the fact of no longer having something that you used to have, or having less of it: • loss of earnings through illness ˈjob loss… …   Financial and business terms

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