Definition

Noun: An unrealized gain on an investment, calculated as the difference between the current market value of the asset and its original purchase price. This profit exists only on paper (in accounting statements) and is not actualized because the asset has not been sold.

Usage

A paper profit is a theoretical increase in wealth. It indicates that an investment's current price is higher than what was paid for it, but the gain is not locked in until the asset is sold. The term is often used in contrast to a realized profit.

Examples

Advanced Usage

• Paper Profit vs. Realized Profit: A paper profit is potential and can be lost if the market price falls before sale. A realized profit is actual cash received from a completed sale.
• Tax Implications: In many jurisdictions, paper profits are not subject to taxation. Taxes are typically levied only on realized gains.

Variants and Related Words

• Paper Loss (n): The opposite of a paper profit; an unrealized loss on an investment where the current market price is below the purchase price.
• Unrealized Gain (n): A synonym for paper profit, often used in formal accounting and finance contexts.
• Mark-to-Market (n/adj): An accounting method that values assets at their current market price, thereby making paper profits and losses visible on financial statements.

Synonyms

• Unrealized gain
• Theoretical profit
• Potential gain
• Book profit

Antonyms

• Realized profit
• Actual gain
• Paper loss
• Realized loss

Related Idioms and Phrases

• "On paper": Used to describe a situation that appears good in theory or in written accounts but may not be true in reality. A paper profit is a profit "on paper."
  • The company looks profitable on paper, but it has serious cash flow problems.

Noun

1. an unrealized gain on an investment calculated by subtracting the investor's cost from the current market price