15.401 Finance Theory I

15.401 Finance Theory I (Fall 2008, MIT OCW). Taught by Professor Andrew Lo, this course provides a rigorous introduction to the fundamentals of modern financial analysis and applications to business challenges in valuation, risk analysis, corporate investment decisions, and basic security analysis and investment management. The four major sections of the course are: (A) an introduction to the financial system, the financial challenges firms and households face, and the principles of modern finance in tackling these challenges; (B) valuation of stocks, bonds, forwards, futures, and options; (C) methods for incorporating risk analysis into valuation models, including portfolio theory, mean-variance optimization, and the Capital Asset Pricing Model; and (D) applications to corporate financial decisions, including capital budgeting and real options. (from

Lecture 13 - Risk and Return II & Portfolio Theory I

This lecture covers empirical properties of stocks and bonds, patterns of returns, and statistical measures of risk of a security. At the very end, stock market anomalies such as the size effect, the value premium, and momentum are presented. And the last 33-minute part of this video introduces the portfolio as a combination of securities and offers guidelines for what constitutes a good portfolio. With regard to measuring risk and reward, a number of assumptions are set forth for the remainder of the course. A brief introduction to mean-variance analysis is presented.

Go to the Course Home or watch other lectures:

Lecture 01 - Introduction and Course Overview
Lecture 02 - Present Value Relations I
Lecture 03 - Present Value Relations II
Lecture 04 - Present Value Relations III & Fixed-Income Securities I
Lecture 05 - Fixed-Income Securities II
Lecture 06 - Fixed-Income Securities III
Lecture 07 - Fixed-Income Securities IV
Lecture 08 - Equities
Lecture 09 - Forward and Futures Contracts I
Lecture 10 - Forward and Futures Contracts II & Options I
Lecture 11 - Options II
Lecture 12 - Options III & Risk and Return I
Lecture 13 - Risk and Return II & Portfolio Theory I
Lecture 14 - Portfolio Theory II
Lecture 15 - Portfolio Theory III & The CAPM and APT I
Lecture 16 - The CAPM and APT II
Lecture 17 - The CAPM and APT III & Capital Budgeting I
Lecture 18 - Capital Budgeting II & Efficient Markets I
Lecture 19 - Efficient Markets II
Lecture 20 - Efficient Markets III & Course Summary