Illiquid common stock is worth less than stock that can be readily sold because
the investor incurs an opportunity cost by being locked into the investment.
Quantifying the amount of this illiquidity discount is an important issue in
valuing certain common stock, especially for estate valuations. We examine
whether a previously developed analytical model for valuing the lost
“option to sell” when a stock is illiquid is a useful, practical
tool for valuing illiquid common stock.