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Simple English definitions for legal terms
paper profit
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A quick definition of paper profit:
Term: Paper Profit
Definition: Paper profit is a profit that you think you will make, but you haven't actually made it yet. For example, if you buy a stock and the price goes up, you have a paper profit until you sell the stock and actually make the profit. It's like having a pretend profit until it becomes real.
A more thorough explanation:
Definition: A profit that is anticipated but not yet realized. It is a gain that has not been received yet, and it is only on paper until it is actually earned.
Example: If you buy a stock for $10 and it goes up to $15, you have a paper profit of $5. However, this profit is not realized until you sell the stock and receive the money.
This example illustrates the definition of paper profit because the gain of $5 is only on paper until the stock is sold and the profit is realized. Until then, it is just a potential gain that may or may not be realized.