7 Research Papers That Built Modern Finance #shorts

This feels illegal to know, but a huge amount of modern finance is built on just these 7 research papers:

1️⃣ Black–Scholes (1973)
A model for pricing options using volatility, time, and interest rates.

This framework helped create the modern derivatives market and still influences trillions in trading today.

2️⃣ Market Efficiency – Eugene Fama (1970)
Markets reflect available information, making consistent outperformance extremely difficult.

This shaped passive investing and the rise of index funds.

3️⃣ Modern Portfolio Theory – Harry Markowitz (1952)
Return isn't everything. Risk matters too.

Diversifying across different assets can improve returns while reducing risk.

4️⃣ CAPM – William Sharpe
Expected returns are driven by systematic risk (beta), not individual asset noise.

A core model used in valuation, investing, and corporate finance.

5️⃣ Arbitrage Pricing Theory – Stephen Ross (1976)
Returns are influenced by multiple economic factors, not just market risk.

This helped pave the way for multi-factor investing strategies.

6️⃣ Agency Theory – Jensen & Meckling (1976)
Managers and shareholders don't always have the same incentives.

This explains many corporate governance and decision-making challenges.

7️⃣ Limits to Arbitrage – Shleifer & Vishny (1997)
Markets don't always correct themselves.

Even rational investors face constraints, which can allow mispricing to persist.

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Видео 7 Research Papers That Built Modern Finance #shorts канала Transform Learning Academy