Much of financial theory seems to assume that assets have a price, for example the concepts of return or volatility. Is there any way to operationalize these concepts for assets which don't have a well defined price, for example private equity?

  • $\begingroup$ Here are some examples of metrics for private equity: docs.preqin.com/misc/Performance_Ratios_and_Example.pdf $\endgroup$ May 29, 2020 at 21:28
  • $\begingroup$ According to Global Investment Performance Standards (GIPS) PE performance should be presented with IRR (Internal Rate of Return) among other stats. Comparison to public equity is indeed difficult; the PME (Public Market Equivalent) formulas, of which KS-PME is the best known, provide a (partial) possible solution. en.wikipedia.org/wiki/Public_Market_Equivalent $\endgroup$
    – nbbo2
    May 30, 2020 at 7:39
  • $\begingroup$ You still pay a price to buy private assets and hope to make a return by selling them to the public market someday at a higher price. So in a sense it is not that different in concept. $\endgroup$
    – nbbo2
    May 31, 2020 at 13:30


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