The focus has been appropriately on the cash-flow challenges that come from a combination of large illiquid investment
portfolios and large systemic shocks that cause adverse shifts in the cash flow models.
government's $700 billion program to help banks sell off the illiquid investments
In recent months, liquidity challenges have come from many directions--holding company cash flow at risk from subsidiary dividends that can no longer be counted on; cash collateral needed to back derivative positions and letters of credit; illiquid investments
backing securities-lending operations; and the simple inability to sell securities for their "intrinsic" value.
Brokerage volumes are expected to fall, mergers and acquisitions (M&As) are scarce and some investments banks are reporting mark-to-market losses on more illiquid investments
But traditionally, when investors have approached retirement, options for converting their illiquid investments
into retirement funds have not been attractive.
Table 3 summarizes the marketability discount rates proposed by the literature examining illiquid investments
In general, broad-liquidity conditions need to be taken into account in the pursuit of interest rate policy because (1) they influence the link between the interbank rate and market interest rates through their effect on the premium firms must pay to raise funds to finance illiquid investments
and (2) they affect the behavior of market interest rates that the central bank must target in order to maintain overall macroeconomic stability with stable prices.
Other companies with valuable but illiquid investments
may be able to obtain a similar exemption.
The fundamental credit profile of illiquid investments
financed debt funding remains unchanged, Moody's said, adding that it is particularly concerned with the scale of overall business investments in relation to Mitsubishi's annual earnings streams and continued high earnings volatility.
But the liquidity premium on illiquid investments
may be so high that it might be efficient to trade optimal incentives for greater liquidity.
It is a very, very serious issue because these tax proposals should radically change the tax system in place and do it to investments already made and locked in, and in many cases illiquid investments
," said Steven A.
Octavius "Ted" Reid III, associate vice president of investments at Dean Witter Reynolds, says financial mistakes commonly made by newly affluent athletes include spending money on depreciating assets, such as cars, or putting all their money in illiquid investments
, such as real estate.