About Robert C. Merton
Robert Cox Merton (born July 31, 1944) is an American economist, Nobel Memorial Prize in Economic Sciences laureate, and professor at the MIT Sloan School of Management. He is best known for his pioneering contributions to continuous-time finance, particularly the first continuous-time option pricing model, the Black–Scholes–Merton model. In 1997, Merton and Myron Scholes were jointly awarded the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel for developing a method to determine the value of derivative securities. Merton was on the board of directors of Long-Term Capital Management (LTCM), a highly leveraged hedge fund that collapsed in 1998, wiping out most of the value paid in by the investors, and requiring a $3.6 billion bailout from a group of 14 banks, in a deal brokered and put together by the Federal Reserve Bank of New York. Merton's current research focus is on the topics of lifecycle investing and retirement funding, measuring and monitoring systemic risks in macrofinance, and financial innovation coupled with changing dynamics in financial institutions. 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.
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