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Stephen A. Ross
Stephen Alan "Steve" Ross (February 3, 1944 – March 3, 2017) was the inaugural Franco Modigliani Professor of Financial Economics at the MIT Sloan School of Management after a long career as the Sterling Professor of Economics and Finance at the Yale School of Management. He is known for initiating several important theories and models in financial economics. He was a widely published author in finance and economics, and was a coauthor of a best-selling Corporate Finance textbook. He received his BS with honors from Caltech in 1965 where he majored in physics, and his PhD in economics from Harvard in 1970, and taught at the University of Pennsylvania, Yale School of Management, and MIT. Ross is best known for the development of the arbitrage pricing theory (mid-1970s) as well as for his role in developing the binomial options pricing model (1979; also known as the Cox–Ross–Rubinstein model). He was an initiator of the fundamental financial concept of risk-neutral p ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Neoclassical Economics
Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good or service is determined through a hypothetical maximization of utility by income-constrained individuals and of profits by firms facing production costs and employing available information and factors of production. This approach has often been justified by appealing to rational choice theory, a theory that has come under considerable question in recent years. Neoclassical economics historically dominated macroeconomics and, together with Keynesian economics, formed the neoclassical synthesis which dominated mainstream economics as "neo-Keynesian economics" from the 1950s to the 1970s.Clark, B. (1998). ''Principles of political economy: A comparative approach''. Westport, Connecticut: Praeger. Nadeau, R. L. (2003). ''The Wealth o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Caltech
The California Institute of Technology (branded as Caltech or CIT)The university itself only spells its short form as "Caltech"; the institution considers other spellings such a"Cal Tech" and "CalTech" incorrect. The institute is also occasionally referred to as "CIT", most notably in its alma mater, but this is uncommon. is a private research university in Pasadena, California. Caltech is ranked among the best and most selective academic institutions in the world, and with an enrollment of approximately 2400 students (acceptance rate of only 5.7%), it is one of the world's most selective universities. The university is known for its strength in science and engineering, and is among a small group of institutes of technology in the United States which is primarily devoted to the instruction of pure and applied sciences. The institution was founded as a preparatory and vocational school by Amos G. Throop in 1891 and began attracting influential scientists such as George Ellery ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Rationality
Rationality is the quality of being guided by or based on reasons. In this regard, a person acts rationally if they have a good reason for what they do or a belief is rational if it is based on strong evidence. This quality can apply to an ability, as in rational animal, to a psychological process, like reasoning, to mental states, such as beliefs and intentions, or to persons who possess these other forms of rationality. A thing that lacks rationality is either ''arational'', if it is outside the domain of rational evaluation, or '' irrational'', if it belongs to this domain but does not fulfill its standards. There are many discussions about the essential features shared by all forms of rationality. According to reason-responsiveness accounts, to be rational is to be responsive to reasons. For example, dark clouds are a reason for taking an umbrella, which is why it is rational for an agent to do so in response. An important rival to this approach are coherence-based ac ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Market Efficiency
There are several concepts of efficiency for a financial market. The most widely discussed is informational or price efficiency, which is a measure of how quickly and completely the price of a single asset reflects available information about the asset's value. Other concepts include functional/operational efficiency, which is inversely related to the costs that investors bear for making transactions, and allocative efficiency, which is a measure of how far a market channels funds from ultimate lenders to ultimate borrowers in such a way that the funds are used in the most productive manner. Market efficiency types Three common types of market efficiency are allocative, operational and informational. However, other kinds of market efficiency are also recognised. James Tobin identified four efficiency types that could be present in a financial market: 1. Information arbitrage efficiency Asset prices fully reflect all of the privately available information (the least demanding r ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Princeton University
Princeton University is a private research university in Princeton, New Jersey. Founded in 1746 in Elizabeth as the College of New Jersey, Princeton is the fourth-oldest institution of higher education in the United States and one of the nine colonial colleges chartered before the American Revolution. It is one of the highest-ranked universities in the world. The institution moved to Newark in 1747, and then to the current site nine years later. It officially became a university in 1896 and was subsequently renamed Princeton University. It is a member of the Ivy League. The university is governed by the Trustees of Princeton University and has an endowment of $37.7 billion, the largest endowment per student in the United States. Princeton provides undergraduate and graduate instruction in the humanities, social sciences, natural sciences, and engineering to approximately 8,500 students on its main campus. It offers postgraduate degrees through the Princeton ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
International Association Of Financial Engineers
The International Association for Quantitative Finance (IAQF), formerly the International Association of Financial Engineers (IAFE), is a non-profit professional society dedicated to fostering the fields of quantitative finance and financial engineering. The IAQF hosts several panel discussions throughout the year to discuss the issues that affect the industry from both academic and professional angles. Since it was established in 1992, the IAQF has expanded its reach to host events in San Francisco, Toronto, Boston, and London. Fischer Black Memorial Foundation The educational arm of the IAQF is the Fischer Black Memorial Foundation (FBMF). While the IAQF focuses on the profession of financial engineering, the FBMF aims to expose students to the financial engineering field and help them work towards a career in the industry. Financial engineering is often underrepresented on university campuses and the FBMF tries to bridge the gap between academia and the professional world. The m ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
American Finance Association
The American Finance Association (AFA) is an academic organization whose focus is the study and promotion of knowledge of financial economics. It was formed in 1939. Its main publication, the '' Journal of Finance'', was first published in 1946. __TOC__ Mission The purpose of the association is to: *Act as a mutual association of persons with an interest in finance *Improve the public understanding of financial problems *Provide for the exchange of financial ideas through the distribution of the ''Journal of Finance'' and other media *Encourage the study of finance in colleges and universities *Conduct other activities appropriate for a non-profit, professional society in the field of finance Membership As of 2022, the association has over 12,000 members. A variety of membership options exist and membership is open to anyone. A number of members are also distinguished in the Society of Fellows of the Association. These are members who have made significant contributions t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Agency Problem
Agency may refer to: Organizations * Institution, governmental or others ** Advertising agency or marketing agency, a service business dedicated to creating, planning and handling advertising for its clients ** Employment agency, a business that serves as a representative, acting on behalf of another ** Government agency, a department of a local or national government responsible for the oversight and administration of a specific function *** Central Intelligence Agency, nicknamed "The Agency" ** International agency, an inter-governmental body ** News agency ** Talent agency Social science * Agency, the abstract principle that autonomous beings, agents, are capable of acting by themselves; see Autonomy * Agency (law), a person acting on behalf of another person * Agency (moral), capacity for making moral judgments * Agency (philosophy), the capacity of an autonomous agent to act, relating to action theory in philosophy * Agency (psychology), the ability to recognize or attribut ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Neoclassical Finance
Neoclassical finance is an approach within finance, developing since the mid-1960s, which holds that markets are efficient, and that prices will thus tend to equilibrium and be "rational"; and asset pricing models must then reflect these. It may be contrasted with, for example, behavioral finance which is based on differing, less idealized, assumptions regarding markets and investors. It built on earlier developments such as the Austrian School of economics, and cross-fertilized with atomic physics (see state price) and other heavily quantitative disciplines. See also * Financial economics and particularly, #Arbitrage-free pricing and equilibrium * Neoclassical economics * Fundamental theorem of asset pricing * Modern portfolio theory * Post-modern portfolio theory Post-Modern Portfolio Theory (PMPT) is an extension of the traditional Modern Portfolio Theory (MPT), an application of mean-variance analysis (MVA). Both theories propose how rational investors can use diversifi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Rational Pricing
Rational pricing is the assumption in financial economics that asset prices - and hence asset pricing models - will reflect the arbitrage-free price of the asset as any deviation from this price will be "arbitraged away". This assumption is useful in pricing fixed income securities, particularly bonds, and is fundamental to the pricing of derivative instruments. Arbitrage mechanics Arbitrage is the practice of taking advantage of a state of imbalance between two (or possibly more) markets. Where this mismatch can be exploited (i.e. after transaction costs, storage costs, transport costs, dividends etc.) the arbitrageur can "lock in" a risk-free profit by purchasing and selling simultaneously in both markets. In general, arbitrage ensures that "the law of one price" will hold; arbitrage also equalises the prices of assets with identical cash flows, and sets the price of assets with known future cash flows. The law of one price The same asset must trade at the same price on all ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cox–Ross–Rubinstein Model
In finance, the binomial options pricing model (BOPM) provides a generalizable numerical method for the valuation of options. Essentially, the model uses a "discrete-time" ( lattice based) model of the varying price over time of the underlying financial instrument, addressing cases where the closed-form Black–Scholes formula is wanting. The binomial model was first proposed by William Sharpe in the 1978 edition of ''Investments'' (), and formalized by Cox, Ross and Rubinstein in 1979 and by Rendleman and Bartter in that same year. For binomial trees as applied to fixed income and interest rate derivatives see . Use of the model The Binomial options pricing model approach has been widely used since it is able to handle a variety of conditions for which other models cannot easily be applied. This is largely because the BOPM is based on the description of an underlying instrument over a period of time rather than a single point. As a consequence, it is used to value American ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Binomial Options Pricing Model
In finance, the binomial options pricing model (BOPM) provides a generalizable numerical method for the valuation of options. Essentially, the model uses a "discrete-time" ( lattice based) model of the varying price over time of the underlying financial instrument, addressing cases where the closed-form Black–Scholes formula is wanting. The binomial model was first proposed by William Sharpe in the 1978 edition of ''Investments'' (), and formalized by Cox, Ross and Rubinstein in 1979 and by Rendleman and Bartter in that same year. For binomial trees as applied to fixed income and interest rate derivatives see . Use of the model The Binomial options pricing model approach has been widely used since it is able to handle a variety of conditions for which other models cannot easily be applied. This is largely because the BOPM is based on the description of an underlying instrument over a period of time rather than a single point. As a consequence, it is used to value Am ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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