kaal:claim:1428387-013

Valuing thinly traded assets with exchange quotes is unsound because the price for less frequently traded assets may not indicate fair market value at the time of valuation, yet nearly a quarter of surveyed funds relied exclusively on such quotes.

Using exchange quotes is problematic if applied to thinly traded assets, as the price for less frequently traded assets may not be indicative of fair market value at the time of valuation,46 and nearly a quarter of survey participants relied exclusively on these quotes to value assets.

Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009), II.D Sophistication of Financial Instruments, p. 12
https://ssrn.com/abstract=1428387 · source PDF

Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387

• thinly traded or infrequently traded assets

failuresupport: evidencedfailure: stale-quote-valuationfamily: valuation-and-pricing-failuredefieconomicsempirical-evidence

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