I didn't become interested in derivatives until 1982, 1983.

We concluded that you cannot rely on delta hedging alone. It sounds simplistic to say that now, but back then, this was the sort of thing people were only just beginning to realize.

Yes, our tree has an interesting shape. The center branches reflect the shape of the zero curve. When extreme parts of the tree are reached the branching pattern changes to accommodate the mean reversion.

Our starting point then was trying to find a way to incorporate mean reversion into the HoLee model.

Briefly speaking, our conclusion is that stochastic volatility does not make a huge difference as far as the pricing is concerned if you get the average volatility right. It makes a big difference as far as hedging is concerned.

The HoLee model was the first term structure model. I remember reading their paper soon after it was published and as it was fairly different from many of the other papers that I had read, I had to read it quite a few times. I realized that it was a really important paper.

I didn't become interested in derivatives until 1982, 1983.

I think VAR is a very healthy development within the industry.

Alan White and I spent the next two or three years working together on this. We developed what is known a stochastic volatility model. This is a model where the volatility as well as the underlying asset price moves around in an unpredictable way.

The real challenge was to model all the interest rates simultaneously, so you could value something that depended not only on the three-month interest rate, but on other interest rates as well.

Our research led on to other things, such as the fact that exchange rates are not lognormally distributed.

In the interest rate area, traders have for a long time used a version of what is known as Black's model for European bond options; another version of the same model for caps and floors; and yet another version of the same model for European swap options.

If each of your time steps is one week long, you are not modeling the stock price terribly well over a one-week time period, because you are saying that there are only two possible outcomes.

I guess any simple idea that is really good will catch on quickly.

We started giving presentations at practitioner conferences in 1986, and since then all of our derivatives research has been stimulated by contact with practitioners.

The problem with interest rates are that you are not modeling a single number, you are modeling a whole term structure, so it is a sort of different type of problem.

There are challenges in terms of the measurement of VAR for what are known as nonlinear derivatives, where things like gamma and vega are important dimensions of the risk.

Our tree is actually a tree of the short-term interest rate. The average direction in which the short-term interest rate moves depends on the level of the rate. When the rate is very high, that direction is downward; when the rate is very low, it is upward.

One important measurement issue concerns the fat tails problem that I mentioned earlier. VAR is concerned with extreme outcomes. If the tails of the probability distributions we are using are too thin, our VAR measures are likely to be too low.

When interest rates are high you want the average direction in which interest rates are moving to be downward; when interest rates are low you want the average direction to be upward.

The music played most around St. Louis was country-western and swing. Curiosity provoked me to lay a lot of the country stuff on our predominantly black audience. After they laughed at me a few times, they began requesting the hillbilly stuff.

I've been told my movies are difficult to market.

In 1979, the Supreme Court ruled 5-3 in Smith v. Maryland that a few days' worth of phone records for a single individual were not protected by the Fourth Amendment. The NSA today, though, collects hundreds of millions of phone records from hundreds of millions of Americans without an individualized warrant.

Usually for cartoons, I record them in the mornings from 9 A.M. to noon, then I have the rest of the day to do on camera. It actually gives me time to work on my own projects.

At Tenafly High, I was lucky to have some dedicated teachers; I'm especially indebted to my calculus instructor, Francis Piersa, who opened my eyes to the striking beauty of mathematics.

The exuberance of democracy leads to undisciplined and disorderly conditions which are inimical to development.

There are so few guys who do action and do it well. Even fewer who are African-American. Even fewer who have classical-theater training. So a cat like me coming in, I'm bringing all of that to an action movie.

Digital technology is both arousing and distancing. We don't look at the users on the other side as people. They aren't - they're just usernames, Facebook photos and Twitter handles.

Cops on the beat can stop problems before the damage spreads.

Any coach, any team in the NFL, if they had Peyton Manning healthy and ready to play, I think we all know who is going to play in the game.

As an entrepreneur, I have been known for taking risks throughout my career, but leaving the European Union is not one of the risks I would want the U.K. to take - not as an investor, not as a father, and not as a grandfather. I am deeply concerned about the impact of leaving.

No one in government should ever think that the citizens they work for can't or won't scrutinize their actions.

The journey of a thousand miles begins with a single step.

I only know I feel good when I fight.

We've got to start worrying about America. And if we don't start dealing with the debt we have and the deficit spending we have in Washington, politics doesn't matter, because the American people do realize that they have to balance their budgets.

The less I talk about being black, the better.

Technological innovation is indeed important to economic growth and the enhancement of human possibilities.

Hope for love, pray for love, wish for love, dream for love... But don't put your life on hold waiting for love.

I always encourage people in the early parts of their career to focus on writing. If you can communicate clearly, if you can articulate a thought, if you can write a great story, then you're going to be successful.

The footprints of a free minded man are always towards the forward direction.

I didn't mean to hit the umpire with the dirt, but I did mean to hit that bastard in the stands.

Democracies have to be careful that they do not become so process-driven.

I speak from a nerd's perspective because I've been watching anime since I was a kid. I grew up on 'Speed Racer' and 'Star Blazers' and 'Battle of the Planets,' and those were some of my first A) cartoons and B) introduction to Japanese couture before I even knew they were Japanese.

I've always loved what I'd term 'dark fiction' writers, everyone from J. G. Ballard to Mervyn Peake and Philip Pullman. I'm not sure it's a genre, but it's what I like best.