New study reveals huge impact of marketability on security values!
Marketability can significantly impact security prices in finance. Researchers have found that discounts for lack of marketability can be substantial, even with short illiquidity periods. By using option-pricing theory, they established an upper limit on the value of marketability. This analysis offers a way to gauge the potential costs of rules limiting investor trading. The study also sheds light on how discounts for lack of marketability relate to the duration of marketability restrictions.