William Forsyth Sharpe, born in 1934, is an American economist and Professor of Finance at Stanford University. In 1990 he won the Nobel Prize in Economic Sciences along with Harry Markowitz and Merton Miller. He was awarded this prize for his contribution to the theory of price formation for financial assets
Sharpe used Makowitz´s previous work on the portfolio theory as a basis and developed in 1952 the capital asset pricing modelknown as CAPM, which is used for pricing financial assets. An investor can determine its portfolio risk exposure, by choosing a combination of fixed income securities and equity securities. He also developed the so-called Sharpe ratio which measures the return of an asset according to the level of risk taken. His innovating discoveries and theories were included in his “Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk”, 1964.