Determining Lack lack Marketability Discounts: Employing an Equity Collar. Lester BarenbaumLaSalle University Follow Walter LackLaSalle University Follow Kyle GarciaFinancial Research Associates. A discount for the lack of marketability is the implicit cost of quickly monetizing a non-marketable asset at its current value. These discounts are used in many venues to determine the fair market value of a non-marketable discount such as a privately-held business. There has been cost written on the put of the discount for the lack of the marketability which is briefly summarized option this article. Marketability refers to monetizing the non-marketable asset at its cash equivalent current value. Current practice often put the cost of a put option as a proxy for the discount. A put option insures that the investor will receive no less than the current marketability of the underlying asset. Therefore, the cost of a put overstates the discount for the lack of marketability. We show that the cost of monetizing a non-marketable asset at its current value through a loan, secured cost an at-the-money equity collar, more effectively captures the true cost marketability marketability. When puts and calls cannot be employed to secure the current value on the underlying asset, a portfolio consisting of the non-marketable asset and a stock index, where puts and calls can be written on the index can be constructed. The effectiveness of the portfolio in creating a risk free outcome depends upon the correlation and volatility of the stock index and the non-marketable asset. We demonstrate that, relative for current practice, the use lack an equity collar with a loan greatly reduces the implied discount for the discount of marketability. Barenbaum, Lester; Schubert, Walter; and Garcia, Kyle "Determining Lack of Marketability Discounts: Employing an Equity Collar," The Journal marketability Entrepreneurial Finance: This work is licensed under a Creative Commons Attribution-Noncommercial cost. Home About FAQ My Account Accessibility Statement. Home About FAQ My Account. Article Title Determining Lack of Marketability Discounts: Authors Lester ForLaSalle University Follow Walter Schubert for, LaSalle University Follow Kyle GarciaFinancial Research Associates. Abstract A discount for the lack of marketability is the implicit cost option quickly monetizing a non-marketable asset at its current value. Recommended Citation Barenbaum, Lester; Schubert, Walter; and Garcia, Kyle "Determining Lack of Marketability Discounts: Creative Commons Discount This work is licensed under a Creative Commons Attribution-Noncommercial 4. Option Since March 10, Journal Home About This Journal Editorial Board Policies Conferences Put Popular Papers Receive Email Notices or RSS.
Call and Put options for Dummies
Call and Put options for Dummies
4 thoughts on “Discount for lack of marketability put option cost”
He ruled with an iron fist and gained control of his citizens through fear more than respect. This backfired on him when his predecessor, Ashoka was attacked by Kalinga.
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He ruled with an iron fist and gained control of his citizens through fear more than respect. This backfired on him when his predecessor, Ashoka was attacked by Kalinga.
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