Course Overview and Objectives

This course focuses on applications of financial theory to investments. It provides an in-depth discussion of fundamental principles related to equity securities and options for both institutional and individual investors. Objectives of this class include understanding (a) How security markets function (b) Tradeoff between risk and return (c) Modern portfolio theory and the Capital Asset Pricing Model (d) Efficient market hypothesis and behavioral finance (e) Option pricing model: binomial pricing model and Black-Scholes model Though we consider the viewpoint of corporate investment professionals and institutional equity money managers at times, the primary focus in this course centers on personal financial decisions related to picking stocks and/or equity mutual funds. Course Prerequisites You are officially required to have taken and passed FIN 3403. You should already be familiar with the following: a) the basic structure of financial statements b) basic statistics concepts such as mean, variance, standard deviation, correlation, and covariance c) MS Excel (or equivalent