Profit and loss: reading the numbers
Profit or loss is the difference between an investment’s current value and its cost.
Before selling, this is an unrealized change in the value of the holding. After selling, the result is realized. Percentage return compares the change to the original cost. To get net results, also account for fees and relevant taxes.
You bought at 100 ₪ and the value is 90 ₪: a value loss of 10 ₪, i.e. 10%. An increase from 90 back to 100 requires about 11.1%.
Calculate the change if an investment of 200 ₪ is now worth 220 ₪.
Investor.gov · Glossary of Terms ↗Check your understanding
An investment of 200 ₪ rose to 220 ₪. What is the return?
- 20%
- 10%
- 2%
Answer and explanation
10%. The gain is 20, divide by 200 and multiply by 100: 10%.
The price fell but you haven't sold yet. What is correct?
- No change in value
- It is guaranteed to recover
- The value of the holding decreased
Answer and explanation
The value of the holding decreased. Value changes even before selling; there is no guarantee the price will return.
Continue learning
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