William Forsyth Sharpe

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William F. Sharpe

4rn
June 16, 1934 (age 77)
Boston, Massachusetts, U.S.
Nati4nality
United States
Fields
Economics
Instituti4ns
William F. Sharpe Associates
StanIord University
UC Irvine
University oI Washington 1961-68
RAND Corporation
Alma mater
University oI CaliIornia, Berkeley, transIerred
UCLA
D4.t4ral advis4r
Armen Alchian
Harry Markowitz (unoIIicial)
D4.t4ral students
Howard Sosin
n4n f4r
Capital asset pricing model
Sharpe ratio
N4table aards
Nobel Memorial Prize in Economic Sciences (1990)
WiIIiam Forsyth Sharpe (born June 16, 1934) is the STANCO 25 Professor of Finance, Emeritus at Stanford
University's Graduate School of Business and the winner of the 1990 Nobel Memorial Prize in Economic
Sciences.
He was one of the originators of the Capital Asset Pricing Model, created the Sharpe ratio for risk-adjusted
investment performance analysis, contributed to the development of the binomial method for the valuation
of options, the gradient method for asset allocation optimization, and returns-based style analysis for evaluating
the style and performance of investment funds.
4ntents
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1 Biography
Selected publications
3 See also
4 ReIerences
External links
edit]Biography
William Sharpe
1]
was born on June 16, 1934 in Boston, Massachusetts. As his father was in the National
Guard, the family moved several times during World War , until they finally settled in Riverside, California.
Sharpe spent the rest of his childhood and teenage in Riverside, also completing most of his pre-college
education there. n 1951 he enrolled at the University of California at Berkeley planning to pursue a degree in
medicine.
2]
However, in the first year he decided to change his focus and moved to the University of California
at Los Angeles to study Business Administration. Finding that he was not interested in accounting, Sharpe had
a further change in preferences, finally majoring in Economics. During his undergraduate studies, two
professors had a large influence on him: Armen Alchian, a professor of economics who became his mentor,
and J. Fred Weston, a professor of finance who first introduced him to Harry Markowitz's papers on portfolio
theory. While at UCLA, Sharpe became a member of the Phi Beta Kappa Society. He earned a B.A. from
UCLA in 1955 and a M.A. in 1956.
After graduation, in 1956, Sharpe joined the RAND Corporation. While doing research at RAND, he also started
work for a Ph.D. at UCLA under the supervision of Armen Alchian. While searching for a dissertation topic, J.
Fred Weston suggested him to ask Harry Markowitz at RAND. Working closely with Markowitz, which in
practice "filled a role similar to that of dissertation advisor",
1]
Sharpe earned his Ph.D. in 1961 with a thesis on
a single factor model of security prices, also including an early version of the Security Market Line.
n 1961, after finishing his graduate studies, Sharpe started teaching at the University of Washington. He
started research on generalizing the results in his dissertation to an equilibrium theory of asset pricing, work
that yielded the Capital asset pricing model. He submitted the paper describing CAPM to the Journal of
Finance in 1962. However, ironically, the paper
3]
which would become one of the foundations of financial
economics was initially considered irrelevant and rejected from publication. Sharpe had to wait for the editorial
staff to change until finally getting the paper published in 1964.
4]
At the same time, the CAPM was
independently developed by John Lintner, Jan Mossin, and Jack Treynor.
n 1968, Sharpe moved to the University of California at rvine but stayed there for only two years and, in 1970
he moved again, this time to Stanford University. While teaching at Stanford, Sharpe continued research in the
field of investments, in particular on portfolio allocation and pension funds. He also became directly involved in
the investment process by offering consultance to Merrill Lynchand to Wells Fargo, thus having the opportunity
to put in practice the prescriptions of financial theory. n 1986, in collaboration with the Frank Russell Company,
he founded Sharpe-Russell Research, a firm specialized in providing research and consultancy on asset
allocation to pension funds and foundations. n 1989 he retired from teaching, retaining the position
of Professor Emeritus of Finance at Stanford, choosing to focus on his consulting firm, now named William F.
Sharpe Associates.
Sharpe served as a President of the American Finance Association and he is a trustee of the Economists for
Peace and Security. He is also the recipient of a Doctor of Humane Letters, Honoris Causa from DePaul
University, a Doctor Honoris Causa from the University of Alicante (Spain), a Doctor Honoris Causa from
the University of Vienna and the UCLA Medal, UCLA's highest honor.