Robert C. Merton

About Robert C. Merton

Who is it?: Economist
Birth Day: July 31, 1944
Birth Place: New York City, New York, USA, United States
Birth Sign: Leo
Alma mater: Columbia University California Institute of Technology Massachusetts Institute of Technology
Known for: Black–Scholes–Merton model ICAPM Merton's portfolio problem Merton model Fractional Finance Long-Term Capital Management
Awards: Nobel Memorial Prize in Economic Sciences (1997)
Fields: Finance, economics
Institutions: Massachusetts Institute of Technology Harvard University
Doctoral advisor: Paul Samuelson
Doctoral students: Jonathan E. Ingersoll Robert Jarrow

Robert C. Merton Net Worth

Robert C. Merton was bornon July 31, 1944 in New York City, New York, USA, United States, is Economist. Robert C. Merton is an American economist who received the Nobel Prize in Economics for his work on developing a financial theory on the risk management of stock derivatives. He also contributed to the assessment of stock options and derivatives. He shared the Nobel Prize with another economist Myron S. Scholes whose ‘Black-Scholes Formula’ for the valuation of options, developed in collaboration with Fischer Black, provided the basic foundation for Merton’s work. Fischer Black could not share the Nobel Prize with Merton and Scholes as he had died in 1995. Merton’s research work covered a large number of aspects related to finance and economics. His main work which probably produced the maximum impact was the work on determining the value of options. Before the development of the ‘Black-Scholes Formula’ it was very difficult and risky to determine the value of stock options which allowed the investors to sell the assets at any price at any point of time. The investors used to incorporate some hedge money as a risk premium into the price of options as safety measure against major financial losses. The ‘Black-Scholes Formula’ showed that risk premiums are already factored into the price of options. Merton’s work was to elaborate this formula so that it could be generalized for other things such as mortgages and student loans.
Robert C. Merton is a member of Intellectuals & Academics

💰 Net worth: $14 Million

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Biography/Timeline

1966

Merton married June Rose in 1966. They separated in 1996. They have three children: two sons and one daughter.

1968

His first professional association with a hedge fund came in 1968. His advisor at the time, Paul Samuelson, brought him on board Arbitrage Management Company (AMC), to join founder Michael Goodkin and chief executive Harry Markowitz. AMC is the first known attempt at computerized arbitrage trading. After a successful run as a private hedge fund, AMC was sold to Stuart & Co. in 1971. In 1993, Merton co-founded a hedge fund, Long-Term Capital Management, which earned high returns for four years but later lost $4.6 billion in 1998 and was bailed out by a consortium of banks and closed out in early 2000.

1970

Merton was born in New York City to a Jewish father Sociologist Robert K. Merton and mother Suzanne Carhart who was from a "multigenerational southern New Jersey Methodist/Quaker family." He grew up in Hastings-on-Hudson, NY. He earned a Bachelor of Science in Engineering Mathematics from the School of Engineering and Applied Science of Columbia University, a Masters of Science from the California Institute of Technology, and his doctorate in economics from the Massachusetts Institute of Technology in 1970 under the guidance of Paul Anthony Samuelson. He then joined the faculty of the MIT Sloan School of Management, where he taught until 1988. Subsequently, Merton moved to Harvard University, where he was George Fisher Baker Professor of Business Administration from 1988 to 1998. He was the John and Natty McArthur University Professor from 1998-2010. He rejoined the MIT Sloan School of Management in 2010 when he went Emeritus.

1988

Robert C. Merton is the School of Management Distinguished Professor of Finance at the MIT Sloan School of Management. He is Resident Scientist at Dimensional Fund Advisors, where he developed a next-generation integrated pension-management solution system that addresses deficiencies associated with traditional defined-benefit and defined-contribution plans. Merton is University Professor Emeritus at Harvard University. He was the George Fisher Baker Professor of Business Administration (1988–98) and John and Natty McArthur University Professor (1998–2010) at the Harvard Business School. He previously served on the Finance faculty of the Sloan School from 1970 until 1988. Merton received the Alfred Nobel Memorial Prize in Economic Sciences in 1997 for a new methodology to value derivatives. He is past President of the American Finance Association, a member of the National Academy of Sciences and a fellow of the American Academy of Arts and Sciences. He holds honorary degrees from eighteen universities.

1993

Merton has also been recognized for translating Finance science into practice. He received the inaugural Financial Engineer of the Year Award from the International Association of Financial Engineers in 1993, which also elected him a senior fellow. Derivatives Strategy magazine named him to its Derivatives Hall of Fame as did Risk magazine to its Risk Hall of Fame. He also received Risk’s Lifetime Achievement Award for contributions to the field of risk management. A distinguished fellow of the Institute for Quantitative Research in Finance ('Q Group') and a fellow of the Financial Management Association, Merton received the Nicholas Molodovsky Award from the CFA Institute.

2019

Merton’s research focuses on Finance theory including lifecycle Finance, optimal intertemporal portfolio selection, capital asset pricing, pricing of options, risky corporate debt, loan guarantees, and other complex derivative securities. He has also written on the operation and regulation of financial institutions. Merton’s current academic interests include financial innovation and dynamics of institutional change, controlling the propagation of macro financial risk, and improving methods of measuring and managing sovereign risk. He is the author of Continuous-Time Finance, and a co-author of Cases in Financial Engineering: Applied Studies of Financial Innovation and The Global Financial System: A Functional Perspective; Finance; and Financial Economics.