Stephen Ross

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Stephen Ross

A neoclassical economist who developed the arbitrage pricing model in the mid-1970s. The arbitrage pricing model seeks to calculate the appropriate price of an asset while taking into account systemic risks common across an asset class. Any security with a price different from the one predicted by the model is considered "mispriced" and is an arbitrage opportunity. Ross also had a hand in developing the binomial option pricing model, which seeks to price options accurately in situations where other models do not easily apply. He is a professor at the Massachusetts Institute of Technology.