William F. Sharpe

William Forsyth Sharpe (born June 16, 1934) is an American economist and academic. He is the Thomas Cabot Professor of Business Administration Emeritus at the Harvard Business School. He is best known for the Sharpe ratio, the measure of the excess return per unit of risk.

Sharpe was born in Boston, Massachusetts. He received a B.A. in economics from MIT in 1956 and a Ph.D. in economics from the University of California, Berkeley in 1961. He taught at the University of Washington from 1961 to 1968 and at the University of California, Los Angeles from 1968 to 1970. He joined the Harvard Business School faculty in 1970.

Sharpe is a pioneer in the field of financial economics. His work on the Sharpe ratio has been influential in the development of modern portfolio theory. He has also made contributions to the fields of asset pricing, risk management, and corporate finance.

Sharpe is a member of the National Academy of Sciences and the American Academy of Arts and Sciences. He has received numerous awards for his work, including the Nobel Memorial Prize in Economic Sciences in 1990.

In his Nobel Prize lecture, Sharpe said:

"The goal of finance is to provide a framework for making rational decisions about the allocation of scarce resources. The challenge is to do so in the face of uncertainty and incomplete information. The tools of finance can help us to understand the risks and rewards of different investment opportunities, and to make better decisions about how to invest our money.

"The Sharpe ratio is a measure of the excess return per unit of risk. It is a useful tool for comparing different investment opportunities and for evaluating the performance of a portfolio over time. The Sharpe ratio is also a useful tool for understanding the trade-off between risk and return.

"The Sharpe ratio is not without its limitations. It is based on historical data, and it does not take into account future changes in risk and return. The Sharpe ratio is also a single-period measure, and it does not take into account the time value of money.

"Despite its limitations, the Sharpe ratio is a valuable tool for understanding the risks and rewards of different investment opportunities. It is a useful tool for making better investment decisions."

Sharpe is a leading authority on financial economics. His work has had a profound impact on the field, and he is considered one of the most influential economists of the 20th century.