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Professor Eugene Fama wins 2007 Fred Arditti Award

April 16, 2007

Eugene Fama, a professor of finance at the University of Chicago Graduate School of Business, has been chosen as the 2007 recipient of the Fred Arditti Innovation Award given by the Chicago Mercantile Exchange Center for Innovation.

“The award celebrates innovation that through practical application has had a positive impact on the economic well-being of individuals, industry or a nation,” according to the announcement from the CME, the world’s largest derivatives exchange.

Fama, the Robert R. McCormick Distinguished Service Professor of Finance, will receive the award at a recognition dinner April 24 at the Four Seasons Hotel in Chicago.

Past recipients of the award are Leo Melamed, CME chairman emeritus, and William Sharpe, a professor emeritus at Stanford Business School and winner of the 1990 Nobel Prize in economics.

In announcing this year’s award, Myron S. Scholes, Nobel-prize winning economist and chairman of CME’s Competitive Markets Advisory Council said, “Eugene Fama has had path-breaking insights into the functioning of markets, asset-pricing theory and corporate finance that have benefited market participants worldwide. He has written extensively on the efficiency of markets setting the backdrop for the transfer of risks through futures contracts such as those traded on the CME. His innovative research has resulted in his participation in the development of many new finance products and in the development of new futures contracts for hedging risks.”

Professor Fama “has demonstrated that prices are expected to reflect supply and demand as well as people’s expectation about risk and return,” said Leo Melamed, who also is vice chairman of the CME’s Competitive Markets Advisory Council.

Says Fama, “Bill Sharpe jump-started asset-pricing theory. I write about efficient markets, but Leo Malamed actually opened some at the CME. It is an honor to be considered in the same company as these two men.”

Fama received an MBA from the University of Chicago Graduate School of Business in 1963 and a Ph.D. in 1964. His empirical and theoretical work on market efficiency changed the way financial practitioners perceive markets. Recently he worked with former Chicago GSB faculty member Kenneth French to develop the three-factor model to describe the tradeoff of risk for expected returns. The model posits that market, size and value risk factors best explain average stock returns. The model is widely used both in academic research and by practitioners to guide asset allocation decisions and to evaluate portfolio performance.

Fama has published approximately 100 articles related to portfolio theory and asset pricing, corporate finance, microeconomics and macroeconomics, including The Theory of Finance, which he co-wrote with the late Merton Miller, a Chicago GSB Professor and Nobel Laureate.

Fama is also the director of research at Dimensional Fund Advisors, Inc., an investment advising firm.

The Arditti Award is named for the former chief economist of the CEM, who was instrumental in developing the exchange’s Eurodollar futures contract, the world’s most actively traded futures contract.

The University of Chicago Graduate School of Business is one of the leading business schools in the world. The school’s faculty includes many renowned scholars and its graduates include many business leaders across the U.S. and worldwide. It is consistently ranked as one of the top ten business schools in the world and usually as one of the top five business schools in the world. The Chicago Approach to Management Education is distinguished by how it leverages fundamental knowledge, its rigor, and its practical application to business challenges.

Chicago GSB offers full-time and part-time MBA programs, an executive MBA program, a Ph.D. program, open enrollment executive education and custom corporate education.

More information about the school is available at

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Last modified at 11:09 AM CST on Monday, July 23, 2007

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