its a short form of work of different individuals from 1950 tell today.

1. Summary of miller’s paper about history of finance
History of Finance is not too old its only dates back to 1950. Finance
surpasses more rapidly than other traditional fields of social sciences and
economics over last seventy years in terms of more students enrolled and a
huge interest of scholarly research in the field... According to Merton Miller
finance have two streams. Approach of business school or micro
normative which have the aim of increasing return at individual level as
well as by corporate level by increasing their profits and overall value of the
firm. While macro normative model explain body of micro optimizers that
how market prices are actually taken.
Following are some of the achievements whose work has been awarded
and they create history for themselves as well as heavily contributed to the
field of finance.
WORK OF MARKOWITZ;
Markowitz wrote his research article of portfolio selection in 1952. Where
he presented the concept of risk and return. Return is identified with
estimated value of possible outcomes, and risk through variance.

2. Markowitz gave a detailed definition of finance: where risk & returns can
be measured through mean variance model. Moreover he develops some
mathematical formula and algebra of different variables for selecting
portfolio. That formula illustrate that for a specific investor, the related unit
is the whole portfolio, not the specific shares. Risk of a specific share
cannot be defined apart from whole portfolio. Covariance governs the risk
reducing paybacks of diversification.
However, the mean-variance model was analyzed by Milton Friedman as it
has zero relation with economics. As it is not an optimal solution for
selecting finest portfolio but after that William sharp, linter and other
individuals worked on it to make it effective.
WORK OF WILLIAM SHARPE;
William Sharpe was a business school teacher and was very keen to
transform the work of Markowitz and present them from business school
point of view. He presented his work in the form of a Model, known as
capital asset pricing model which shows the relation of risk bearing assets
and its expected rate of returns. Initially sharp start working by imagining a
world where every investor follow Markowitz mean variance model having
same expectation of risk and return. He says that if inputs are the same for

3. a portfolio selection then every investor has the same proportion of risky
assets which is UN realistic to have same portfolio and second the idea of
investing in a portfolio is not new. CAPM provide powerful insights to the
nature of risk and it leads to innovations in field of finance.
WORK OF EUGENE FAMA;
Eugene Fama developed The efficient-market hypothesis who argued that
stocks always trade at their reasonable value, making it impossible for
investors to either purchase undervalued stocks or sell stocks for inflated
prices.in other beating the market is impossible because it reflect all
available information, so it is impossible to make profit from any trading
strategy rather investing in high risky stocks. It is one of the major
contributions in the field of finance
Alfred Cowles was the first to determine stock prices in 1930s. The Cowles
indexes of stock prices have more information & consist of the
computerized database to enhance the field finance.
However, the mechanical approach of normal returns was seriously tested
by statisticians, who explain that stock prices are in random walks, which
means that fundamental analysis have no predictive power for future stock

4. returns. But in late 1960s it was found that stock prices are not random
predictability and speculation can also be considered.
WORK OF MODIGLIANI AND MILLERS;
Modigliani and miller both is the professor at GSIA. They wrote a theorem
by the name of “the cost of capital, corporation finance and theory of
investment” published in American economic review in 1958. According to
M&M proposition they explain that market capitalization of a company is
calculated through its earning capacity and the risk bearing by its assets
keep both dividend distribution and how they finance their assets are
independent. The difficulty arise when this proposition is tested on ground
floor because its develop in a tax free word where there is no transaction
cost, no bankruptcy, symmetrical information etc. But still like efficient
market hypothesis M&M proposition play a vital role in the development of
finance. For their best work both are awarded by Nobel prices in 1985 and
1990 respectively.
OPTION:
Options are recently devolved in finance also recognized by noble
committee. This development is brought by Merton, scholes and fisher
black to resolve the conflict of macro and micro normative. Option means

5. among other things means which can be observed and can be visualized in
right quantities. According to fisher black estimating variance than
estimating expected returns. The estimation of variance can be improved
by cutting the time into small intervals. Option revolution devolved the
macro normative stream in finance, and In order to have a research in
options there are massive opportunities for both streams.
RECONSTRUCTION OF FINANCE
Miller says as young member of German finance association that research
in corporate finance and asset pricing become saturated. Options have
opened up new areas of research like agency theory and behavioral
finance. Initial breakthrough injected by Markowitz in 1952 and
development of options are highly appreciated by finance. Many financial
establishment and stocks are devolved using options which may bring a
new era to finance.

6. among other things means which can be observed and can be visualized in
right quantities. According to fisher black estimating variance than
estimating expected returns. The estimation of variance can be improved
by cutting the time into small intervals. Option revolution devolved the
macro normative stream in finance, and In order to have a research in
options there are massive opportunities for both streams.
RECONSTRUCTION OF FINANCE
Miller says as young member of German finance association that research
in corporate finance and asset pricing become saturated. Options have
opened up new areas of research like agency theory and behavioral
finance. Initial breakthrough injected by Markowitz in 1952 and
development of options are highly appreciated by finance. Many financial
establishment and stocks are devolved using options which may bring a
new era to finance.