Mathematical models are developed to approximate engineering, physical, environmental, social, and economic phenomena of various complexities. To ensure a correct use of a model, an appreciation of the relationship between (model) input factors and (model) output is of fundamental importance....

We show that mutual funds report their junior stakes in startups at 43% higher valuation than model fair values that consider multi-tier capital structures of startups. The latest-issued and most senior security is worth 48% per share than junior securities held by mutual funds, implying that...

Mutual funds value private security holdings at considerably different prices, update evaluations infrequently, and revise valuations dramatically at follow-on funding events. Predictable private valuation changes at follow-on rounds yield predictable fund returns, but effects are muted for...