= Stephen A. Ross
{c}
{wiki=Stephen_Ross_(economist)}
<Stephen A. Ross> developed <arbitrage pricing theory>, which relates expected asset returns to exposures to common sources of risk under assumptions limiting <arbitrage>. His mathematical approach asks how restrictions on feasible trading strategies constrain prices, rather than starting solely from an individual investor's preferences.<Professor Stephen Ross, inventor of arbitrage pricing theory, dies at 73 by Zach Church>[6 March 2017, discussion of arbitrage pricing theory and its 1976 introduction]{ref}
With <John C. Cox> and <Mark Rubinstein>, he also developed the <Cox--Ross--Rubinstein model> for <option pricing>. The <binomial price tree> separates the possible stock-price paths from the valuation rule: a <replicating portfolio> and <no-arbitrage> produce <risk-neutral pricing> even when the actual up-move probability is not specified.<Option Pricing: A Simplified Approach by John C. Cox and others>[1979, basic one-period argument and its extension to multiple periods]{ref}
\Image[https://news.mit.edu/sites/default/files/styles/news_article__image_gallery/public/images/201703/Ross_1994.jpg?itok=Qcq03Vmr]
{title=Portrait of <Stephen A. Ross>}
{description=1994 portrait reproduced in the MIT institutional obituary.}
{source=https://news.mit.edu/2017/professor-stephen-ross-inventor-of-arbitrage-pricing-theory-dies-0306}
{width=260}
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