(Bloomberg View) -- This week on our Masters in Business radio podcast, we sit down with William Sharpe, winner of the 1990 Sveriges Riksbank Prize in Economic Sciences (aka Nobel Prize for economics) and creator of the capital-asset pricing model.
Among other things, Sharpe helped Wells Fargo & Co. develop the first index fund. Then, he came up with a way to calculate returns based on investment risk -- he called it the reward-to-variability-ratio portfolio, but the rest of us know it as the Sharpe ratio. It tells you what a portfolio returns relative to the amount of risk an investor assumes versus risk-free Treasuries.
Sharpe, 82, now is working on an issue related to retirement income that he calls “the thorniest problem in all of finance.”
SoundCloud: Interview With William Sharpe: Masters in Business (Audio) by Bloomberg View
You can stream or download the full conversation, including the podcast extras, on iTunes, SoundCloud, Overcast and Bloomberg. Our earlier podcasts can all be found on iTunes, SoundCloud and Bloomberg.
Next week, we speak with Daren Acemoglu, the professor of economics at the Massachusetts Institute of Technology, and author of "Why Nations Fail: The Origins of Power, Prosperity, and Poverty."
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”
To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.net.
To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net.
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