Liquidity Illusion: The General Equilibrium Theory of Private Capital Valuation

Graduate Finance Course · 32 Sessions · Spring 2027

Graduate-level course on the GE-LAV® framework for liquidity-adjusted valuation in private capital markets. Two-track design accommodating both practitioner-oriented (Track 1) and research-oriented (Track 2) graduate finance students.

Author

Samir Asaf, PhD, CFA, CMA, CTP, CM&AA

Published

May 18, 2026

0.1 Course Preview · 24 minutes

0.1.1 Try the production engine

The same GE-LAV® framework taught here is implemented as a live valuation tool at liquidityillusion.com, with calibrated state parameters, real-time π(L, T) computation, and portfolio-level stress testing.

Open liquidityillusion.com →

0.2 The General Equilibrium Theory of Private Capital Valuation

Graduate Finance Course · Spring 2027 · 32 Sessions · 3 Credit Hours

Samir Asaf, PhD, CFA, CMA, CTP, CM&AA
Senior Partner, Regent Financial LLC, New York
Former Finance Instructor, Stanford University

0.3 Why This Course Exists

The most dangerous phrase in finance is: “assume the liquidity premium is constant.” It is not a simplification — it is a mistake with large, measurable, and correctable consequences for managing trillions in institutional capital.

This course teaches the GE-LAV® framework — the first continuous-time general equilibrium model of liquidity pricing in private markets. Students will learn why conventional Discounted Cash Flow (DCF) analysis structurally misvalues private assets, what a correct theory must deliver, and how to implement liquidity-adjusted valuation across private equity, infrastructure, private credit, and real estate.

0.4 What You Will Build

By the end of the course, every student will have:

  • A working command of the GE-LAV® valuation hierarchy (DCF ⊊ LAV ⊊ GE-LAV)
  • The ability to identify and quantify the Jensen convexity bias in real private-market portfolios
  • A complete liquidity-adjusted valuation of a real private market asset of their choice (the term project)
  • Familiarity with the secondary market evidence that exposes the liquidity illusion
  • Working knowledge of the GE-LAV® computational platform

Track 2 students will additionally:

  • Derive the optimal exit boundary from first principles using stochastic control
  • Prove the existence of a mean-field equilibrium under McKean-Vlasov dynamics
  • Calibrate the Ornstein-Uhlenbeck liquidity process to empirical data
  • Implement the Pigouvian exit tax under stress scenarios

0.5 Two-Track Design

This course recognizes that graduate finance students arrive with different mathematical backgrounds and different career trajectories. Rather than teaching to the lowest common denominator (which would frustrate quantitative students) or the highest (which would exclude practitioner-oriented students), the course is structured as two parallel tracks merging into a common core.

Track 1 (Practitioner) Track 2 (Researcher)
Sessions 1–24 Common core: 24 sessions identical for both tracks
Sessions 25–31 Applied case workshops Full mathematical derivations
Session 32 Project presentations (both tracks present)
Math required Asset pricing, basic calculus Stochastic calculus, measure theory
Problem sets 4 applied (real data) 4 mathematical (proofs + numerics)
Best for MBA / MSF / applied master’s students MFE / quant master’s / PhD-track students

See Tracks for full declaration policy and decision guidance.

0.6 Course Structure at a Glance

  • Unit 1 (Sessions 1–5): Why private market valuation is broken — DCF failures, the liquidity illusion, term structure
  • Unit 2 (Sessions 6–10): Measurement and theory — IRR/PME, what a correct theory must deliver, midterm
  • Unit 3 (Sessions 11–18): Exit timing, portfolio construction, regulation, implementation
  • Unit 4 (Sessions 19–24): Math intuition bridges — OU, HJB, MFG, GE, Jensen, Pigouvian (concepts, not proofs)
  • Unit 5 (Sessions 25–31): Split track — applied vs. mathematical deep dives
  • Capstone (Session 32): Project presentations

See the full 32-session schedule.

0.7 Assessments

Component Weight
Midterm exam (Session 10) 20%
4 problem sets (track-differentiated) 25%
Term project (proposal + draft + presentation) 50%
Class participation 5%

There is no final exam. Session 32 is reserved for project presentations.

See the project specification, midterm blueprint, and problem sets overview for details.

0.8 Primary Text

Asaf, S. (2026). Liquidity Illusion: The General Equilibrium Theory of Private Capital Valuation. Forthcoming, 2026. 421 pp. Under editorial review.

The book is structured in two parts that mirror the course’s two tracks:

  • Part 1 (Chapters 1–9): The Practitioner’s Guide — required for all students
  • Part 2 (Chapters 10–20): The Researcher’s Framework — required for Track 2; recommended optional for Track 1
  • Chapter 21: Future research directions

0.9 Instructor

Samir Asaf is Senior Partner at Regent Financial, a private markets advisory firm in New York. He holds a PhD in Finance, an MSc (Economics) from LSE, a PGDip in Mathematical Economics from Birkbeck, and a BSc (Economics) from Boston College. He is a CFA, CMA, CTP, CM&AA, and Chartered Director (FIoD, UK).

His research explores stochastic control, McKean-Vlasov mean-field games, and their application to private markets. The GE-LAV® framework introduced in the primary text is his main contribution to financial economics. He is a Senior Principal Investment Banker, holding active FINRA Series 7, 24, 63, 66, 79, and 82 licenses, and has advised leading institutional investors and fund managers on private equity, infrastructure, private credit, and cross-border M&A across North America, Europe, Asia-Pacific, and the Middle East.

His earlier work, Executive Corporate Finance: The Business of Enhancing Shareholder Value (Prentice Hall, 2004), has been adopted worldwide for MBA and executive education programs.

This course website is the canonical source for the syllabus, schedule, lecture notes, problem sets, and term project. All updates appear here first.