Nobel Laureate Robert Merton Visits Students In Singapore

(Newswire.net — December 7, 2015) Singapore, Singapore — On December 2, 2015, Nobel laureate Dr. Robert C. Merton, School of Management Distinguished Professor of Finance at MIT Sloan, visited Singapore American School’s Khoo Teck Puat Library to speak on his work in finance, and the Nobel Prize. The Nobel Prizes are awarded every year on December 10, the anniversary of Alfred Nobel’s death. Together with Myron Scholes, Dr. Merton received the 1997 Nobel Prize in economics for a new method to determine the value of derivatives. Dr. Merton is renowned for his work on the Black-Scholes-Merton option pricing model.

 

Dr. Merton is also University Professor Emeritus at Harvard University, and was the George Fisher Baker Professor of Business Administration (1988-98) and the John and Natty McArthur University Professor (1998-2010) at Harvard Business School. He authored the 1997 Nobel lecture “Applications of Option-Pricing Theory: Twenty-Five Years Later.” Merton’s research focuses on finance theory, including lifecycle and retirement finance, optimal portfolio selection, capital asset pricing, pricing of derivative securities, credit risk, loan guarantees, financial innovation, the dynamics of institutional change, and improving the methods of measuring and managing macro-financial risk.

 

Describing his philosophy behind his academic work, he said, “Models are not used for their beauty; they are used for their application. Whatever your field, you always have to make abstractions from reality. You can never cover all of reality. I bought my first stock when I was 10 years old. I knew every trade symbol. I had experience in markets and insight into practical consequences, which helped me know what a good abstraction was.”

 

Answering high school students’ questions about his experiences as a Nobel laureate, Dr. Merton said, “If you thought Nobel Prize winners followed a steady path all the way till their achievement, you couldn’t be further from reality,” said Dr. Merton. “The world is such that there are many paths that lead to a good place. Don’t let yourself be pigeonholed.”

Fielding questions from high school students, Dr. Merton noted that risk is a fact of life and the study of economics helps a person pick the best investment choices available to them, as well as creating opportunities to tackle probability and uncertainty.

 

High school senior Saif Kureishi said, “From Dr. Merton, I learned not only the specifics of the Black-Scholes-Merton model, but also about the importance and permanence of certain economic models and theories, and how even though models can never be perfect or permanent, it is important to be smart with a model and to evaluate risks despite a model’s assumptions.”

 

“Although I have yet to study economics, Dr. Merton’s talk was enriching because in his discussion of models, he also made analogies to people and our experiences, and brought up the impacts and potential inaccuracies of models in our general lives. That’s something important for us to keep in mind as we go through our education,” said Sunita Srivatsan, a junior and AP Research student.

 

Says high school librarian, AP Seminar, and SAS Catalyst teacher Bob Helmer, “We have a very strong parent community at Singapore American School, and one of our school parents, Stephen Quance, had Dr. Merton visiting. Mr. Quance was very gracious in making time for Dr. Merton to visit SAS. This was an amazing opportunity for students and faculty to interact with Dr. Merton, especially around the topics of research, economics, finance, solving world issues, and pursuing passions in life.”