One of the few boneheadedly obvious things financial theory tells us is that an asset is worth more if you can immediately convert it into cash. A CD maturing in a year is worth a discount to face value; an illiquid bond maturing in a decade is worth less; a minority shareholding in a small company is worth even less.

Fortunately for anyone who gets paid to explain this stuff for a living, the terminology is hopelessly confused. As one of my CFA workbooks pointed out, the two terms people use for the extra return investors demand in exchange for their money being locked up are “illiquidity…