In Memoriam: Stephen A. Ross

A preeminent academic, Ross published many papers across a wide range of subjects in both economics and finance. [...]his work-particularly as it relates to investment management-had an intensely practical focus. By the time options started trading on the Chicago Board Options Exchange, the Black-Scholes model had come into general use, and in 1975, Texas Instruments introduced its new programmable pocket calculator that came equipped with a card allowing the calculation of call values and hedge ratios using this model. If it is possible to replicate the payoffs of any derivative security-indeed, any asset-by combining a position in another security with cash holdings, then it is possible to define position weights at each point in time that lead to an investment that has no risk and deserves a riskless rate of return. At a theoretical level, it links the pricing of fixed-income securities to the process responsible for interest rate movements; at the practical level, it provides a basis for valuing fixed-income derivative securities.