Unrealized Gain - Explained
What is Unrealized Gain?
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Table of ContentsWhat is Unrealized Gain?How Does Unrealized Gain Work?Difference Between Unrealized Gain and Unrealized LossAcademic Research on Unrealized Gain
What is Unrealized Gain?
An unrealized gain is a type of profit that an investor, company or individual is yet to receive but is expected to make in the future. A profit that is recorded on paper is an unrealized gain, such profit can be made through an investment or sales by a company. It is the income an investor or company is expected to receive in the future. Once assets or stock are sold in exchange for cash, or a stock position closed for a profit, the gain becomes realized.
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How Does Unrealized Gain Work?
There are diverse factors that could lead to the occurrence of an unrealized gain, in the case of an investment, when an investor holds the opinion that the investment would yield more gains later in the future, this is an unrealized gain. Holding onto an investment for a longer period of time with the expectation that its gains will increase is an instance unrealized gain.
Difference Between Unrealized Gain and Unrealized Loss
An unrealized loss is the direct opposite of an unrealized gain, an unrealized loss is a loss that exists on paper but has not been realized in real life. An unrealized loss can exist when an investor maintains a stock position for an investment which has accrued losses or retains a losing stock. In certain cases where an investor thinks he is holding onto an investment that could realize higher gains in the future, such a position can turn to an unrealized gain given certain market forces. For instance, a position can turn for the worse when there is price fluctuation that makes the market price of the security higher than the amount initially paid for the security by the investor.
Academic Research on Unrealized Gain
- [CITATION] The Research of the Unrealized Gain and Loss Impact under Fair Value Accounting [J], Chang-ming, Z. H. O. U. (2009). The Research of the Unrealized Gain and Loss Impact under Fair Value Accounting [J]. Journal of Lanzhou Commercial College, 2.
- Introduction. The unrealized gain of cerebral revascularization, Russin, J. J., Dehdashti, A. R., Vajkoczy, P., Kuroda, S., & Mao, Y. (2019). Introduction. The unrealized gain of cerebral revascularization. Neurosurgical focus, 46(2), E1.
- Unrealized Gain and Loss and Dividend Law, FLB, Jr. (1942). Unrealized Gain and Loss and Dividend Law. University of Pennsylvania Law Review and American Law Register, 338-346.
- Impact of the unrealized gain or loss on stock returns: theory and tests in an alternative utility framework, Li, S. (2016). Impact of the unrealized gain or loss on stock returns: theory and tests in an alternative utility framework(Doctoral dissertation, Universit Grenoble Alpes).
- Fair value accounting: villain or innocent victim-exploring the links between fair value accounting, bank regulatory capital and the recent financial crisis, Shaffer, S. (2010). Fair value accounting: villain or innocent victim-exploring the links between fair value accounting, bank regulatory capital and the recent financial crisis. FRB of Boston Quantitative Analysis Unit Working Paper, (10-01).
- Does disposition drive momentum?, Shumway, T., & Wu, G. (2005). Does disposition drive momentum?.
- ANALYSIS OF DERIVATIVES'UNREALIZED GAINS/LOSSES FROM PRE-SFAS 133 DISCLOSURES: BANKING INDUSTRY, Duangploy, O., & Helmi, D. (2002). ANALYSIS OF DERIVATIVES'UNREALIZED GAINS/LOSSES FROM PRE-SFAS 133 DISCLOSURES: BANKING INDUSTRY. Academy of Accounting and Financial Studies Journal, 6(3), 1.
- Fair value accounting and the financial crisis: messenger or contributor?, Magnan, M. L. (2009). Fair value accounting and the financial crisis: messenger or contributor?. Accounting perspectives, 8(3), 189-213.
- Prospect theory, mental accounting, and momentum, Grinblatt, M., & Han, B. (2005). Prospect theory, mental accounting, and momentum. Journal of financial economics, 78(2), 311-339.
- Effects of comprehensive-income characteristics on nonprofessional investors' judgments: The role of financial-statement presentation format, Maines, L. A., & McDaniel, L. S. (2000). Effects of comprehensive-income characteristics on nonprofessional investors' judgments: The role of financial-statement presentation format. The accounting review, 75(2), 179-207.