An unrealized gain or loss, also known as a paper gain or loss, occurs when the value of an asset changes compared to its purchase price, but the change has not yet been realized through an actual transaction, such as a sale. This concept applies to various types of investments or assets, including but not limited to stocks, real estate, or bonds. For example, if you own shares in a company, and the market price of those shares increases, you experience an unrealized gain. However, if the market price drops below the purchase price, it results in an unrealized loss. These changes are 'unrealized' because they remain theoretical until the asset is actually sold at market value.