Financial Reporting requirements often demand that estimates of value are made for illiquid assets or instruments (e.g. private equity, property, some types of bonds, and other bespoke instruments). Valuations conducted in such contexts (whether done internally or by external experts), are often “smoothed”. This generally understates volatility (and risk), resulting in a potential over-allocation of assets to such asset classes. [Read more…] about The Effects of Appraised Valuations on Volatility and Capital Allocations to Illiquid Assets
Archives for November 2017
Despite the fact that the world is uncertain, this is often overlooked in forecasting activities which most often rely on a single case or a small set of scenarios. This blog briefly highlights some of the key practical benefits (both quantitative and qualitative) of using uncertainty approaches to forecasting.