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STOCKS
STOCK IS AN INVESTMENT IN A COMPANY OR COMPANIES. STOCK GOES UP AND DOWN IN VALUE MUCH MORE QUICKLY THAN BONDS.
BLACK / SHOLES MODEL
OPTIONS
ROBERT C. MERTON ECONOMIST STANFORD UNIVERSITY
MYRON SCHOLES
BLACK SHCOLES FORMULA AND ESSENTIAL TOOL USED BY TRADERS AROUND THE WORLD WITH THE ASSUMPTION OF A FUNCTIONING MARKET.
ROBERT MERTON -
ALREADY MU
JOHN MERIWETHER - WITH MODEL WANTED TO START THE COMPANY "LONG TERM CAPITAL MANAGEMENT" (LPCM) GIANT HEDGE FUND THAT WOULD USE A MATHEMATICAL MODEL
RAISE 3 BILLION DOLLAR IN A FEW MONTHS.
SET UP IN GRENICH CONNECTICUT.
1ST YEAR 20 PERCENT
2ND YEAR 40 PERCENT.
1997 RETURNS FELL TO ONLY 17%
SUNDAY SEPTEMBER 20TH FED WENT TO GRENICH TO MEET WITH LTCM. ORGANIZED A BALE OUT OF THE FUND.
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