Net liquidating equity
The NAV is transformed into cash without requiring any action from the investor; we refer to this process as the self-liquidation property of private equity portfolios.
The purpose of this paper is to have a closer look at this characteristic.
Short puts will be margined as Cash Secured (100% requirement) for margin accounts not approved for uncovered options.
Calendar spreads and diagonal spreads are not allowed in Cash Settled Indexes (SPX, RUT, NDX, etc.) Spreads of any kind are not allowed in American-style Cash Settled indexes (OEX) Liquidation strikes are issued to accounts liquidating positions entered into without having sufficient funds to meet the initial requirement (Fed call).
Owner's equity, that is, represents what the owners own outright.Private equity is an illiquid asset class; investors cannot sell their funds when they want to without potentially facing high losses.However, unlike other illiquid asset classes, private equity is a distributing asset - a cash-flow based asset class that generates liquidity when the underlying investments are sold.And, for that reason, it also appears in the so-called accounting equation, or balance sheet equation.Assets = Liabilities Owners' equity or, equivalently Owners' equity = Assets– Liabilities = Net Worth The Balance sheet always "balances," whether the firm's financial position is very good, or terrible.