Paper Valuation
Paper valuation refers to the notional or estimated value of an asset based on its current market price, without considering the actual realization of that value through a sale or transaction. It is often used to describe the valuation of assets like stocks, real estate, or investments that have appreciated in value but have not been sold. Paper valuations can change with market conditions and may not reflect the cash value that could be realized if the asset were sold.
Example
An investor’s stock portfolio has a paper valuation of $500,000, reflecting the current market value of the stocks. However, this value can fluctuate with market changes until the stocks are sold.
Key points
• Represents the notional value of an asset based on market prices, not actual sales.
• Can fluctuate with changes in market conditions.
• The true value is realized only when the asset is sold or converted into cash.
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