Finance Theory I

Course Dates: Open-ended
Enrollment Dates: Enroll Anytime
Who can Enroll: Anyone
Course Language: English
Price: FREE

About the Course

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.

For a more detailed list of topics covered in this course, refer to the Course Outline by Topic (PDF). The chapters listed in the outline refer to the main course textbook.


Brealey, Richard, Stewart Myers, and Franklin Allen. Principles of Corporate Finance. 9th ed. New York, NY: McGraw Hill, 2007. ISBN: 9780071266758.

About the Professor

Andrew Wen-Chuan Lo is the Charles E. and Susan T. Harris Professor of Finance at the MIT Sloan School of Management. He is a leading authority on hedge funds and financial engineering; he proposed the adaptive market hypothesis. Lo is the author of several academic articles in Finance and Financial economics.

License Information

Andrew Lo. 15.401 Finance Theory I, Fall 2008. (Massachusetts Institute of Technology: MIT OpenCourseWare), (Accessed 14 Mar, 2015). License: Creative Commons BY-NC-SA

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The Massachusetts Institute of Technology (MIT), founded in 1861, is located in Cambridge, Massachusetts, and is one of the foremost U.S. institutions in science and technology. It is comprised of five schools and one college, including the renowned School of Engineering and Sloan School of Management, offering Bachelor’s, Master’s, and [...]

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