Merton, Robert C.

Merton, Robert C.

▪ American economist
born July 31, 1944, New York, N.Y., U.S.

      American economist known for his work on finance theory and risk management; he is noted especially for his contribution to assessing the value of stock options (stock option) and other derivatives. Merton shared the Nobel Prize for Economics in 1997 with Myron S. Scholes (Scholes, Myron S.), whose option valuation model, the Black-Scholes formula (developed with economist Fischer Black), provided the foundation for much of Merton's work. (Upon his death in 1995, Black became ineligible for the Nobel Prize, which is not awarded posthumously.)

      After studying engineering mathematics at Columbia University (B.S., 1966) and applied mathematics at the California Institute of Technology (M.S., 1967), Merton turned to the study of economics at the Massachusetts Institute of Technology (Ph.D., 1970). He taught at MIT's Sloan School of Management from 1970 until 1988, when he joined the faculty of the Harvard Business School. In addition to his academic duties, he served on the editorial boards of numerous economic journals and as a principal member of Long-Term Capital Management, an investment firm he cofounded and in which Scholes was also a partner. Merton wrote many economic treatises, as well as the book Continuous-Time Finance (1990).

      Though his research covers many areas of finance theory and economics, Merton's work on option valuation is perhaps his most influential. Prior to 1973, when Black and Scholes published their landmark formula, determining the value of stock options was extremely risky and difficult owing to the nature of options, which are essentially agreements that give investors the right to either buy or sell an asset at some fixed time in the future. The challenge of an option is to predict its value at that distant time; before the Black-Scholes formula was introduced, those investing in options determined a risk premium to hedge against major financial losses. The Black-Scholes formula showed that risk premiums are not necessary for investment in stock options because such premiums are already factored into the prices of stocks. Merton used his background in mathematics to generalize the formula by relaxing certain restrictions and assumptions set by Black and Scholes, such as the rather unlikely assumption that the stock will pay no dividends. By altering the formula, Merton allowed it to apply to other financial matters, such as mortgages and student loans.

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Universalium. 2010.

Look at other dictionaries:

  • MERTON, ROBERT C. — MERTON, ROBERT C. (1944– ), U.S. economist and educator; co recipient of the 1997 Nobel Memorial Prize for economics. A New York City native, raised in Hastings on Hudson, N.Y., Merton was the middle child of renowned sociologist robert k. merton …   Encyclopedia of Judaism

  • Merton, Robert K. — ▪ American sociologist in full  Robert King Merton , original name  Meyer Robert Schkolnick   born July 4, 1910, Philadelphia, Pennsylvania, U.S. died February 23, 2003, New York, New York       American sociologist whose diverse interests… …   Universalium

  • Merton, Robert K. — ► (1910 2003) Sociólogo estadounidense. Es el principal representante, junto a T. Parsons, del funcionalismo. Autor de Teoría y estructura sociales (1957) y Sobre estructura social y ciencia (1996) …   Enciclopedia Universal

  • MERTON, ROBERT KING — (Meyer Schkolnick; 1910–2003), U.S. sociologist. Born in Philadelphia, Merton received his B.A. from Temple University in 1931 and his M.A. (1932) and Ph.D. (1936) from Harvard. A student of George R. Simpson, Pitirim Sorokin, and Talcott Parsons …   Encyclopedia of Judaism

  • Merton, Robert King — ▪ 2004 Meyer R. Schkolnick        American sociologist (b. July 4, 1910, Philadelphia, Pa. d. Feb. 23, 2003, New York, N.Y.), made wide ranging contributions to the field, especially the sociology of science; he coined such expressions as “self… …   Universalium

  • Merton, Robert K(ing) — orig. Meyer R. Schkolnick born July 4, 1910, Philadelphia, Pa., U.S. died Feb. 23, 2003, New York, N.Y. U.S. sociologist. After receiving a Ph.D. from Harvard University in 1936, Merton taught there and at Tulane University before moving to… …   Universalium

  • Merton,Robert King — Mer·ton (mûrʹtn), Robert King. Born 1910. American sociologist who proposed that deviant behavior results when a society offers no acceptable means of achieving acceptable goals. * * * …   Universalium

  • Merton, Robert K(ing) — orig. Meyer R. Schkolnick (4 jul. 1910, Filadelfia, Pa., EE.UU.–23 feb. 2003, Nueva York, N.Y.). Sociólogo estadounidense. Después de obtener su Ph.D. en la Universidad de Harvard en 1936, fue docente en ese lugar y en la Universidad de Tulane… …   Enciclopedia Universal

  • Robert King Merton — (* 5. Juli 1910 in Philadelphia, Pennsylvania als Meyer Robert Schkolnick; † 23. Februar 2003 in New York) war ein US amerikanischer Soziologe. Merton ist Vater von Robert C. Merton, dem Wirtschafts Nobelpreisträger von 1997. Inhaltsverzeichnis …   Deutsch Wikipedia

  • Robert C. Merton — Robert Carhart Merton Robert Carhart Merton (* 31. Juli 1944 in New York) erhielt 1997 gemeinsam mit Myron S. Scholes den Preis für Wirtschaftswissenschaften der schwedischen Reichsbank in Gedenken an Alfred Nobel. In der Begründung hieß es: „Für …   Deutsch Wikipedia

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