Stephen Alan "Steve" Ross (February 3, 1944 – March 3, 2017) was the inaugural Franco Modigliani Professor of

Financial Economics Financial economics is the branch of economics characterized by a "concentration on monetary activities", in which "money of one type or another is likely to appear on ''both sides'' of a trade".William F. Sharpe"Financial Economics", in Its co ...

at the MIT Sloan School of Management after a long career as the

Sterling Professor Sterling Professor, the highest academic rank at Yale University, is awarded to a Academic tenure in North America, tenured faculty member considered the best in their field. It is akin to the rank of distinguished professor at other universities. ...

of Economics and Finance at the

Yale School of Management The Yale School of Management (also known as Yale SOM) is the graduate school, graduate business school of Yale University, a Private university, private research university in New Haven, Connecticut. The school awards the Master of Business Admi ...

. He is known for initiating several important theories and models in

financial economics Financial economics is the branch of economics characterized by a "concentration on monetary activities", in which "money of one type or another is likely to appear on ''both sides'' of a trade".William F. Sharpe"Financial Economics", in Its co ...

. He was a widely published author in finance and economics, and was a coauthor of a best-selling

Corporate Finance Corporate finance is an area of finance that deals with the sources of funding, and the capital structure of businesses, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and the tools and analy ...

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 The University of Pennsylvania (Penn or UPenn) is a Private university, private Ivy League research university in Philadelphia, Pennsylvania, United States. One of nine colonial colleges, it was chartered in 1755 through the efforts of f ...

, 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 pricing. In 1985 he contributed to the creation of the Cox–Ingersoll–Ross model for interest rate dynamics. Such theories have become an important part of the paradigm known as neoclassical finance. Ross also introduced a rigorous modeling of the agency problem in 1973, as seen from the principal's standpoint. Ross served as president of the American Finance Association in 1988. He was named International Association of Financial Engineers' Financial Engineer of the Year in 1996. He gave the inaugural lecture of the Princeton Lectures in Finance, sponsored by the Bendheim Center for Finance of Princeton University, in 2001. It became a book in 2004, presenting neoclassical finance and defending it, including such notions as the efficiency and rationality of markets, against its critics, especially those who belong to the behavioral finance tradition. Ross was a recipient of a 2006 Smith Breeden Prize, a 2012 Onassis Prize, a 2014 Morgan Stanley - AFA Award for Excellence in Finance, as well as a 2015 Deutsche Bank Prize for developing models used for assessing prices for options and other assets in the previous 30 years. Ross chaired the theses of a number of prominent economists, including John Y. Campbell, Douglas Diamond, Philip H. Dybvig, and William N. Goetzmann. Two of his students, Douglas Diamond and Philip H. Dybvig, won the Nobel Memorial Prize in Economic Sciences in 2022.

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External links

Sloan Faculty Profile

* * {{DEFAULTSORT:Ross, Stephen 1944 births 2017 deaths American financial economists People from Boston Harvard Graduate School of Arts and Sciences alumni University of Pennsylvania faculty Yale University faculty Fellows of the Econometric Society California Institute of Technology alumni MIT Sloan School of Management faculty Corporate finance theorists Yale Sterling Professors Fellows of the American Academy of Arts and Sciences Presidents of the American Finance Association