The CEM methodology also introduces a new standardization process for
illiquid assets, including Unlisted Real Estate and Private Equity, to eliminate the reporting lag between the time when an underlying asset changes value and when that value is reported to the pension fund.
"If you do have
illiquid assets, that is why it is more important that you plan for that particular asset."
As such, those who are aware of their self-control problems, referred to as "sophisticates," are more likely to utilize
illiquid asset accounts.
This is because the latter option requires holding large balances of cash and foregoing the high return on the
illiquid asset (and, therefore, the associated higher level of long-run consumption).
A well-meaning alumnus might wish to give but have much of his wealth tied into
illiquid assets, such as a house or a collection of artwork.
An IP that invests in
illiquid asset classes, such as private equity, real estate, or oil and gas, typically will require partners to commit to contribute capital for a fixed percentage of ownership in the entity.
consumption if an
illiquid asset is held, and the costs of occasional
Whilst they were not exposed to subprime and credit derivatives, many did assume unwise and sometimes highly damaging concentrations in
illiquid asset classes, notably real estate and private equity, which saw dramatic falls in value," he said.
Remember; property is a very
illiquid asset class - you can't just go and cash it in or make a withdrawal as you could if your money was invested in the bank or building society.
This research shows why it is not supportable to apply instruments and perspectives underlying IFV to
illiquid asset valuation, and why this may lead to distorted analysis of the rational behavior of buyers and sellers of
illiquid assets.
At the beginning of the year, the insurance company is invested in a mix of three different assets: cash, a relatively liquid asset, and an
illiquid asset. The liquid and
illiquid assets can be thought of as common stocks (or other risky assets), which differ in the magnitude of their bid-ask spreads.
An
illiquid asset is one in which the proceeds available from physical liquidation or a sale on some date are less than the present value of its payoff on some future date.
