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 ocw.mit.edu)
|Lecture 17 - The CAPM and APT III & Capital Budgeting I|
This lecture starts with an example that uses CAPM to explain market-cap portfolios. And then for the last an hour, this lecture focuses on making financial decisions as a manager, including applying the NPV rule and calculating project cash flows. Another example presented incorporates discount rates over time and NPV in the context of project decisions. Different methods of sorting, including by size, beta, and volatility, are analyzed.
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