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Scholes, Myron S.


SCHOLES, MYRON S. (1941– ), economist, financier, and educator; joint winner of the 1997 Nobel Prize for economics. Born in Timmins, Ont., Scholes earned his B.A. in economics in 1962 at McMaster University in Hamilton, Ont., where he had lived since the age of 10. He completed his M.B.A. in 1964 and Ph.D. in 1969 at the University of Chicago. While working on his dissertation, he took a position in 1968 as assistant professor in finance at the Sloan School of Management at Massachusetts Institute of Technology (mit). In 1973 Scholes returned to the University of Chicago as an associate professor (later promoted to professor) in the Graduate School of Business; a decade later, in 1983, he joined the finance and law faculty at Stanford University's Graduate School of Business and Law School and attained his current status of emeritus in 1996.

Scholes grew up surrounded by family who were involved in business; in particular, his mother directed him toward the field and even assisted him with his first investment account as a teenager. After his mother's death when he was 16, he remained mindful of her vision for his future throughout his academic years. During his graduate studies he developed a passion and dedication for research.

In his 30-plus years of teaching, Scholes wrote a vast collection of articles on economic and finance topics in various business periodicals. However, none were more revolutionary than his and Fischer Black's 1973 "The Pricing of Options and Corporate Liabilities" in the Journal of Political Economy, which introduced their equation on stock options pricing. Later that year Robert Merton's similar research culminated in his paper "The Theory of Rational Option Pricing" (in the Bell Journal of Economics), and the three collaborated to prove their theory in the live market with their 1976 mutual fund, Money Market/Options Investment, Inc. The successful results caused a dramatic eruption of "derivatives" markets, and its usage has not only endured but also led to Scholes and Merton's selection as co-recipients of the 1997 Nobel Prize in economics. (Black had passed away in 1995.)

Among Scholes' many professional affiliations were managing partner at Oak Hill Capital Management, chairman of Oak Hill Platinum Partners, and the American Finance Association's president in 1990, as well as serving on the board of directors of several corporations. In 1993 Scholes and Merton were two founders of the Greenwich, Conn.-based Long-Term Capital Management (ltcm), a hedge fund that he left not long after its downfall in 1998 (but prior to its liquidation in 2000). He holds honorary doctoral degrees from the University of Paris-Dauphine (1989), McMaster University (1990), and Belgium's Katholieke Universiteit Leuven (1998). In 1991 he co-wrote with Mark A. Wolfson the book Taxes and Business Strategies: A Planning Approach (updated second edition, 2001).

[Dawn Des Jardins (2nd ed.)]

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