Modern Finance
Founder Merton Miller Dies Page
2
When asked for a simple explanation of his theorum,
Miller responded, "If you take money out of your left
pocket and put it in your right pocket, you're no
richer." When reporters were surprised that he received
the Nobel for something so obvious, he quipped, "Yes,
but remember, we proved it rigorously."
Miller received the Nobel Memorial Prize in Economic
Sciences in 1990 for his part of the "M&M theorem."
Miller and Franco Modigliani, who received the Nobel
in 1985, had worked together to establish a method
to consistently value a firm. In the end, they found
that the market value of a firm is independent of
its capital structure - therefore, the proportion
of equity and debt that the firm uses to finance its
operations does not affect the value of the corporation.
This was later modified to account for some of the
market's imperfections.
The media often asked him to explain the theorem
in simple terms, and he sometimes responded, "If you
take money out of your left pocket and put it in your
right pocket, you're no richer." When reporters were
surprised that he received the Nobel for something
so obvious, he quipped, "Yes, but remember, we proved
it rigorously."
Born in Boston, Miller graduated from Harvard University
in 1943 and received his doctorate from Johns Hopkins
University in 1952.
Miller worked at the U.S. Treasury Department and
the Board of Governors of the Federal Reserve System
before receiving his first academic appointment at
the London School of Economics in 1952. From there,
he worked at Carnegie-Mellon University in Pittsburgh.
In 1961, he joined University of Chicago's business
school where he taught with and to renown economists
for almost 40 years.
In addition, Miller was the author of eight books
and served as a public director on the Chicago Board
of Trade from 1983 to 1985 and at the Chicago Mercantile
Exchange from 1990 until his death.
Autobiographical
sketch
Books
by Merton Miller
06/26/00
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