paper loss

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Paper Loss

A loss on an investment that has not yet been realized. That is, a paper loss occurs when the current price of a security which is still owned by the holder is lower than the price the holder paid for it. As a result, it is possible that the paper loss might be erased if the price increases again. A paper loss represents a decrease in one's net worth, but it may or may not affect one's lifestyle. See also: Paper profit.

paper loss

Paper profit (or loss).

If you own an asset that increases in value, any increase in value is a paper profit, or unrealized gain. If you sell the asset for more than you paid to buy it, your paper profit becomes an actual profit, or realized gain.

The same relationship applies if the asset has lost value. You have a paper loss until you sell, when it becomes a realized loss.

You owe no capital gains tax on a paper profit, though you use the paper value when calculating gains or losses in your investment portfolio, for example. The risk with a paper profit is that it may disappear before you realize it. On the other hand, you may postpone selling because you expect the value to increase further.

References in periodicals archive ?
The majority of the unrealized losses occurred in common stocks and other invested assets, such as investments in limited partnerships.
Both realized and unrealized losses can be hard to discover from a mutual fund's financial statements.
Applicable Criteria and Related Research: Treatment of Unrealized Losses in U.
But S&P regards the impact on the banks' capital as minimal because it excludes unrealized gains from the banks' capital ratios while deducting unrealized losses from their capital when evaluating their capital strength.
At the current level of Japan's stock index, the impact of unrealized losses on most of the banks' Tier 1 capital ratios is relatively minor,'' it said.
As such, banks might not hedge interest rate risk from their securities portfolio since the hedge gains would not be able to mitigate unrealized losses from AFS securities that flow through to regulatory capital.
Between 2004 and 2007, the Fed funds rate increased more than 400 bps, although unrealized losses during that period would have decreased common equity tier 1 capital ratios of the 57 sampled banks by an average of only 6 bps, reflecting banks' active management of interest rate risk in their investment portfolios.
Combined, these dividends have averaged 50% of net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses (gains) on interest rate swaps, net(1) during this period.
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES Non-GAAP Reconciliation of Net Income to EBITDA and Net Income to Net Income Excluding Unrealized Losses (Gains) on Interest Rate Swaps, Net Three and Nine Months Ended September 30, 2009 and 2008 (Unaudited) (All currency expressed in United States dollars in thousands, except per share amounts)
1) The following is a reconciliation of net income to EBITDA, a reconciliation of net income attributable to Textainer Group Holdings Limited common shareholders to net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses (gains) on interest rate swaps, net and a reconciliation of net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share to net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share excluding unrealized losses (gains) on interest rate swaps, net for the three and nine months ended September 30, 2009 and 2008.
Net income excluding unrealized losses on interest rate swaps, net(1) for the year ended December 31, 2008 was $97.
The dividend represents 42% of net income excluding unrealized losses on interest rate swaps, net for the fourth quarter.