能否解释一下标识部分，没看懂

问题如下：

Discuss Smith’s method for estimating the increase in return expectations derived from increasing the endowment allocation to private equity.

选项：

解释：

Private equity is recognized as an illiquid alternative investment and could offer higher returns via a liquidity premium.

The illiquidity premium (also called the liquidity premium) is the expected compensation for the additional risk of tying up capital for a potentially uncertain time period. It can be estimated, as Smith has done, by using the idea that the size of a discount an investor should receive for such capital commitment is rep resented by the value of a put option with an exercise price equal to the hypothet ical “marketable price” of the illiquid asset as estimated at the time of purchase. Smith can derive the price of the illiquid private equity asset by subtracting the put price from the “marketable price.” If both the “marketable price” and the illiquid asset price are estimated or known, then the expected return for each can be calculated, with the difference in expected returns representing the illiquidity premium (in %).