EDU Articles
Learn about investing, trading, retirement, banking, personal finance and more.
What is an Unrealized Gain?
Gains and losses are only "real" when shares are sold or withdrawals are made, but up until that point the gains were more of a notional amount, and are said to be "unrealized."
A more salient way to understand unrealized gains is to look at the opposite: unrealized losses. If a person makes an investment of $1,000 and the value of the shares drops sharply the next week, has the person lost any money? The answer of course is no, not unless he sells the shares and takes the lower market price for them.
If the person does not sell the shares while they are valued lower, and their values go back up after that, he has avoided realizing losses and may be able to realize gains in the future.
Unrealized gains might be disacussed with regards to taxes: if a stock is held for years and is valued significantly higher than when it was purchased, no taxes will be due year to year (except in the case of dividend distributions) on the unrealized gains, but the minute the amounts over the purchaser's cost basis are liquidated for cash settlement, the purchaser will have to report those gains for tax purposes since a gain has been realized.
What is Form 6781: Gains and Losses from Section 125 Contracts and Straddles?
What are the Tax Implications for Making a Profit (or Loss) On a Stock?
What are Large Cap Mutual Funds?
Large Cap mutual funds primarily invest in companies with the highest market capitalizations
How is a 457 Plan Different From a 401(k)?
A 457 is only slightly different than a 401(k), but the differences can be important
How Do I Invest Money in My 457 Plan?
Investments are funded through payroll deductions and go into investment options chosen by the sponsoring employer
What is an Irrevocable Trust?
An Irrevocable Trust is one in which the grantor (the person who creates and funds the trust) cannot modify the trust...
What is a Prospectus?
A Prospectus is a legal document that must be filed with the SEC when an investment is offered for sale to the public
What is Securitization?
Securitization is to turn an asset which would otherwise not be a liquid, tradable security, into one
What is a Margin Account?
A margin account is one in which an investor uses borrowed money to purchase additional securities
What is Bank Credit?
Bank Credit is the amount of loaned capital that an individual or business is capable of getting from a bank at a...
What is market arbitrage?
Market arbitrage is when investors, find price discrepancies between one exchange and another and exploit the difference