• Business
  • Crypto
  • Investing
  • Lifestyle
  • Money
  • Glossary
    • A
    • B
    • C
    • D
    • E
Search
Finance Reference
Quotes by TradingView
  • Business
    • How Thought Industries LMS is Revolutionizing Online Learning and Development for Organizations
      The Benefits of ERP Software in the Construction Industry
      Learn How Web Optimization Can Catapult Your Business With This Easy Guide
      The Pros and Cons of Incorporating for Tax Purposes in Canada
      How Hiring Professionals Can Help You Sell Your Home Faster
  • Crypto
    • Unveil the Hidden Delights of Internet Betting for Unforgettable Wins
      Bitcoin’s Role in the Financial System of Germany
      Bitcoin and blockchain: Exploring the potential for new use cases and applications
      Understanding the blockchain: How it powers Bitcoin
      The Role of Mining in the Crypto Ecosystem: Why it Matters
  • Investing
    • How effective is Elliott wave theory?
      The Impact of Cryptocurrency Investment on Inflation – A Comparative Analysis
      How can you explain interest rate predictions?
      Errol Damelin’s Financial Golden Guidelines To Boost Investment Success Rates
      Forex Trading: What You Need to Know
  • Lifestyle
    • 4 Questions to Plan for Retirement Together
      Tips On How To Earn Some Money When Gambling Online
      Don’t Risk Your Belongings: Discover Why You Need a Residence Evacuation Pro
      Safeguarding Your Finances: Tips for Spotting and Avoiding Online Gambling Scams
      Delta-8 THC: What It Is and How It Differs from Delta-9 THC
  • Money
    • Make Money Online: 7 Real and Easy Ways
      Exploring the Basics of Stablecoins
      A Comprehensive Guide to Instant Cash Advance Apps: How They Work and What to Look For
      What is Astropay And How Does It Work?
      Building a Strong Credit Score: Your Roadmap to Financial Success
  • Glossary
    • Fix vs Trunk Club
      Comparing Stitch Fix vs Trunk Club: Which Subscription Box is Best for You?
      Relationship Between the Stock Market and the Economy
      Understanding the Relationship Between the Stock Market and the Economy
      What to Do with Your Bonus Money
      What to Do with Your Bonus Money
      How Much Money Do I Need to Quit My Job?
      How Much Money Do I Need to Quit My Job?
      How to Invest in Yourself as a Woman
      How to Invest in Yourself as a Woman
      AllABCDE
  • Glossary
  • P

Paper Profit (Paper Loss)

By
rjonesx
-

What is ‘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.

Explaining ‘Paper Profit (Paper Loss)’

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.

Further Reading

  • Profit-Loss Sharing Model for External financing – ideas.repec.org [PDF]
  • The entrepreneurial role of profit‐and‐loss sharing modes of finance: Theory and practice – www.emerald.com [PDF]
  • Do global banks spread global imbalances? Asset-backed commercial paper during the financial crisis of 2007–09 – link.springer.com [PDF]
  • Sensationalism, newspaper profits and the marginal value of Watergate – onlinelibrary.wiley.com [PDF]
  • GENERAL REGULATORY FRAMEWORK IN RASTIN PROFIT AND LOSS SHARING BANKING:: PART III-AUXILIARY PROVISIONS – ssbrj.org [PDF]
  • Failure and potential of profit-loss sharing contracts: A perspective of New Institutional, Economic (NIE) Theory – www.sciencedirect.com [PDF]
  • Fear and greed in financial markets: A clinical study of day-traders – pubs.aeaweb.org [PDF]
  • 1988 Competitive Manuscript Award: Did Firms Undertake Debt-Equity Swaps for an Accounting Paper Profit or True Financial Gain? – www.jstor.org [PDF]
  • The effects of multinationals' profit shifting activities on real investments – www.jstor.org [PDF]
Previous articlePassive Activity Loss Rules
Next articlePale Recession
rjonesx

RELATED ARTICLESMORE FROM AUTHOR

Fix vs Trunk Club

Comparing Stitch Fix vs Trunk Club: Which Subscription Box is Best for You?

Relationship Between the Stock Market and the Economy

Understanding the Relationship Between the Stock Market and the Economy

What to Do with Your Bonus Money

What to Do with Your Bonus Money

EDITOR PICKS

FAAMG Stocks

Earnings Before Tax (EBT Formula)

Should I invest in additional life coverage?

Quarter (Q1, Q2, Q3, Q4)

SPX vs SPY: Which is Better for Trading Options on the S&P 500?

Per Stirpes vs Per Capita

Latest

6 Ways to Save Yourself from Extra Stress If You’ve Been Injured in an...

Seven Tips For A Prolific Career In Marketing

Seven Career Options in MBA Finance

Macroeconomic Indicators: Definition, Types, and Importance

Why Online Gambling is Worth Exploring: Unlocking Financial Opportunities

How Thought Industries LMS is Revolutionizing Online Learning and Development for Organizations

  • A
  • B
  • C
  • D
  • E
  • F
  • G
  • H
  • I
  • J
  • K
  • L
  • M
  • N
  • O
  • P
  • Q
  • R
  • S
  • T
  • U
  • V
  • W
  • X
  • Y
  • Z
  • About
  • Accessibility
  • Privacy
  • Sitemap