paper loss


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Related to paper loss: paper profit, Paper gain

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 ?
Every household in the country is sitting on paper losses of almost pounds 1,000 so far on bail-outs for Royal Bank of Scotland and Lloyds Banking Group.
2 billion shares to settle their loans amounting to Sh17 billion.The shares were acquired at a price of Sh7.78 each but the airline's stock price has since dropped 51.7 percent to close at S.75 on Friday, resulting in the lenders' paper loss of Sh8.6 billion.
On reports that RM2 billion had been wiped out from Bursa Malaysia, Dr Mahathir asserted the amount of paper loss was nothing compared to the burden of a RM1 trillion debt that had been inherited and is now being shouldered by the current government.
RBS's share price slumped more than 5% yesterday, leaving City investors that bought the stake sitting on a paper loss.
The Central Bank recorded a paper loss of 75 million on its gold deposits.
New figures released by the central bank show that it recorded a paper loss of EUR75m on its gold deposits.
Mechel has released US GAAP financial results for Q2 2012 reporting paper loss of almost 1 billion dollars.
Drahi was identified as the single biggest loser over that period, having incurred a paper loss of some 243 million new shekels ($62 million) through his stock ownership of HOT cable company.
But the pounds 34.5bn currently invested had shrunk to pounds 23.6bn as of June 30 - a 32% paper loss of pounds 10.9bn, equal to about pounds 950 per household.
By that reckoning, the paper loss of pounds 1,000 must be offset against the benefit to average household finances resulting from the decision to save the banking system.
The fi rm's chairman Rupert Mucklow described the figure as a "paper loss" and said the firm still had a good balance sheet but warned that the company would face a tough year ahead as fewer firms invested in new premises.