Once upon a time, during my studies in the CFA program, I recall that there was a term for “stale pricing”. Something greek or otherwise not easily recalled. Can anybody tell me what that term was?
(I’ll explain why I’m asking soon, because I’ll need more help than this.)
Net asset value arbitrage?
No. It went something like this: Stock prices look really volatile, because they are reported every minute of every day. Real estate doesn’t look nearly as volatile, because it’s only reported once a year. Therefore, people think that real estate is less volatile than stocks, but that’s simply not true. They just don’t see it as often, so it’s less visible to them.
There’s a technical term for this phenomenon in the curriculum. But I don’t have my curriculum, and I can’t recall the terminology. Any L3 candidates want to help out?
its a greek word? i dont recall a specific definition. 1 is just appraisal data vs mark to market!
Dampened??? Understated??? Smoothed??? 
Darned if I remember a specific technical term!!!
You’re thinking of “illiquidity premium,” perhaps?
Yeah i don’t think the Greeks cover that and I used to write practice exam questions covering that section. There’s a great example of a bird or bat flying through a tunnel that makes for a good intuition.
Here’s II on the topic will look for the graphic I’m thinking of later.
The more I think about it, I think breadmaker is right. We might say that in an illiquid asset, the volatility is “artificially smoothed” or that people think that volatility in those assets appears low because of the “artificial smoothing of returns.”
That farm thing is actually a good example. They claim low volatility for an illiquid asset that never gets sold. Lol. Even appraisal is faulty. Getting a loan on a farm is very difficult apparently. You won’t get that 20 percent down bs.
I can think of asynchronism, not greeky though.
Yeah, that’s it. Thanks!!!