DEFINITION of 'Robert C. Merton'
An American economist who won the 1997 Nobel Memorial Prize in Economic Sciences, along with Myron Scholes, for his method of determining the value of options, the BlackScholes model. Fischer Black, the coauthor of the BlackScholes equation on which the model is based, died in 1995. Merton also developed an intertemporal capital asset pricing model based on William Sharpe's capital asset pricing model (CAPM). CAPM is a way of calculating anticipated investment returns based on the level of risk.
BREAKING DOWN 'Robert C. Merton'
Merton was born in 1944 in New York City and earned his Ph.D. in economics from the Massachusetts Institute of Technology, where he studied under Paul Samuelson. He taught at MIT for nearly two decades after receiving his doctorate, then taught at Harvard for another two decades. Along with Scholes and others, Merton was a founding principal of the hedge fund LongTerm Capital Management, which went from tremendous success to spectacular failure and became the subject of a tax evasion lawsuit.

Myron S. Scholes
An American economist and winner of the 1997 Nobel Prize in Economics ... 
Merton Model
A model, named after the financial scholar Robert C. Merton, ... 
Black Scholes Model
A model of price variation over time of financial instruments ... 
William F. Sharpe
An American economist who won the 1990 Nobel Prize in Economics, ... 
Black's Model
A variation of the popular BlackScholes options pricing model ... 
International Capital Asset Pricing ...
A financial model that extends the concept of the capital asset ...

Investing
Understanding the BlackScholes Model
The BlackScholes model is a mathematical model of a financial market. From it, the BlackScholes formula was derived. The introduction of the formula in 1973 by three economists led to rapid ... 
Options & Futures
Options Pricing: BlackScholes Model
The BlackScholes model for calculating the premium of an option was introduced in 1973 in a paper entitled, "The Pricing of Options and Corporate Liabilities" published in the Journal ... 
Options & Futures
NYIF Instructor Series: Black Scholes Model
In this short instructional video Anton Theunissen explains the Black Scholes model. 
Options & Futures
How To Build Valuation Models Like BlackScholes (BS)?
Want to build a model like BlackScholes? Here are the tips and guidelines for developing a framework with the example of the BlackScholes model. 
Fundamental Analysis
Taking Shots At CAPM
Find out why many investors think the capital asset pricing model is full of holes. 
Options & Futures
Circumvent Limitations of BlackScholes Model
Mathematical or quantitative modelbased trading continues to gain momentum, despite major failures like the financial crisis of 200809, which was attributed to the flawed use of trading models. ... 
Professionals
The BlackScholes Option Valuation Model
The BlackScholes Option Valuation Model 
Fundamental Analysis
Capital Asset Pricing Model  CAPM
CAPM is a model that describes the relationship between risk and expected return. 
Bonds & Fixed Income
ESOs: Using the BlackScholes Model
Companies need to use an optionspricing model in order to "expense" the fair value of their employee stock options (ESOs). Here we show how companies produce these estimates under the rules ... 
Fundamental Analysis
The Capital Asset Pricing Model: An Overview
CAPM helps you determine what return you deserve for putting your money at risk.

What is the average return on equity for a company in the electronics sector?
Learn about the BlackScholes option pricing model and the binomial options model, and understand the advantages of the binomial ... Read Answer >> 
How is implied volatility used in the BlackScholes formula?
Learn how implied volatility is used in the BlackScholes option pricing model, and understand the meaning of the volatility ... Read Answer >> 
How is implied volatility for options impacted by a bearish market?
Learn why implied volatility for option prices increases during bear markets, and learn about the different models for pricing ... Read Answer >> 
What technical skills must one possess to trade options?
Learn about the technical skills required to trade options and how mathematical and computer science skills give you a better ... Read Answer >> 
What is the formula for calculating the capital asset pricing model (CAPM)?
Learn about the capital asset pricing model, or CAPM, and how this formula is used to determine the expected rate of return ... Read Answer >> 
Can delta be used to calculate price volatility of an option?
Learn how implied volatility is an output of the BlackScholes option pricing formula, and learn about that option formula's ... Read Answer >>