Myron Scholes Answers Taleb and Other Questions
Interesting finance q/a with Nobel prize winner Black-Scholes.
Click Here To Read Myron Scholes Latest Interview
Article Introduction & Excerpts (Via NYT)
Q.You’re known as the “intellectual father of the credit-default swap.” Do you accept that label?
A. Let’s see. If it’s good, yes. If not, no.
In 1997, you shared the Nobel in economics for your Black-Scholes theory. Is the name intended as a riff on the black-hole theory?
No, but a friend of mine did tell me that when he was a physicist and wanted to get a job in finance, he interviewed at a bank, and the bank asked what he was working on, and he did say, “Black holes.” And they said: “Great! You’re working on Black-Scholes? You’re hired.”
Q. Can you define the Black-Scholes theory?
A. It’s an equation that prices options on common stock and provides a methodology to value options on securities generally. It can be used to measure risk and transfer risk.
Q. The writer Nassim Nicholas Taleb contends that instead of giving advice on managing risk, you “should be in a retirement home doing sudoku.”
A. If someone says to you, “Go to an old-folks’ home,” that’s kind of ridiculous, because a lot of old people are doing terrific things for society. I never tried sudoku. Maybe he spends his time doing sudoku.
