John F. O. Bilson
“I love the City of Chicago. For finance people, it is both the intellectual and practical center of the universe. I love the exchanges, the universities, and the train stations where the grain was shipped in and the people shipped out in the 19th century. It is impossible to study finance in this city without being aware of its historical significance.”
Notable Vignette
In 1973, I was attending an International Economics workshop at the University of Chicago where we were discussing the volatility of exchange rates after the breakdown of the Bretton Woods system. Professor Gene Fama suggested that we could understand volatility if we considered exchange rates to be like equity prices, national income to be like earnings, and the money supply to be like shares issued. Using this model, he demonstrated that the exchange rate was equal to the present discounted value of earnings per share, and that revisions in the discounted value could lead to large, unanticipated, changes in exchange rates. I followed Fama’s lead in my doctoral dissertation “The Monetary Approach to the Exchange Rate.”
Ten years later, Fama wrote an important paper on an idea that I had originally developed.
What excites me about Stuart
IIT’s main campus lies between the skyscrapers of the Chicago financial district and the ivory towers of Hyde Park. This location also describes our intellectual character. We strive to be academically rigorous and we focus on the real, applied, needs of the industry that we serve. Our students typically have a background in engineering, computer science, or economics/finance, and we develop programs that allow them to thrive in financial markets, banking, and investment management.
The most exciting parts of our job occurs when a graduating student tells us of his new position, an alumni writes back with news about his promotion, or a new family is presented to us as the ultimate outcome of our educational process.
My Teaching Philosophy
I am involved in the financial markets as both a participant and as an academic researcher. My students know that I am willing to discuss both my successes and my failures as an individual trader. It is important that students understand that financial markets are dynamic and that no approach to the markets will last forever. It is therefore necessary that we teach students how to learn, rather than what to learn. Students offer ask me how I can continue to teach the same material. My answer is that the material that we teach is different every time we teach the class.
My Teaching/Research Interests
In my role as program director, I have developed and taught a large fraction of the courses in the MS Finance program. I am currently focusing on the introductory course
on Valuation and Portfolio Management because I believe that it is essential that students develop a solid understanding of basic principles at the beginning of their graduate studies.
In my role as associate director of the PhD program, I am supervising a number of doctoral dissertations most of which are in the area of international finance and investments.
My own current research focuses on the following areas:
i) Reform of the financial system, particularly short term money markets.
ii) Incentive compensation and risk management.
iii) Pricing of energy derivatives based upon climate derivatives.
iv) Factor models for equities, bonds, and foreign exchange.
