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Great Moments in Financial Economics: I. Present Value

Journal Of Investment Management, Vol. 1, No. 1, First Quarter 2003

Posted: 1 Apr 2004  

Mark Rubinstein

University of California, Berkeley - Haas School of Business

Abstract

This is the first in a series of articles to appear in this Journal on the history of significant ideas in financial economics. Perhaps the most basic of these is the idea of present value. Early contributors include Johan de Witt (1671), the famous mathematician Abraham de Moivre (1725), and the famous scientist Edmund Halley (1761). But it was Irving Fisher who in 1930 laid the theoretical foundations behind the concept as a byproduct of the standard inter-temporal model of rational consumption choice. In 1938 John Burr Williams applied the model to the discounting of dividends and derived what later became known as the Gordon growth formula.

Keywords: Present Value

JEL Classification: G00

Suggested Citation

Rubinstein, Mark, Great Moments in Financial Economics: I. Present Value. Journal Of Investment Management, Vol. 1, No. 1, First Quarter 2003. Available at SSRN: https://ssrn.com/abstract=495102

Mark Rubinstein (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

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