Syllabus PDF
Syllabus PDF
Syllabus PDF
This master’s level course provides learners a rigorous introduction to the fundamentals of modern
finance and their applications to business challenges in valuation, investment and risk
management, and corporate financial decisions. This course focuses on four topics:
1. The financial challenges firms and households face and the principles of modern finance
in tackling these challenges;
2. Valuation of fixed income securities and common stocks;
3. Risk analysis, the Arbitrage Pricing Theory (APT), and the Efficient Market Hypothesis
(EMH);
4. Introduction to corporate finance and capital budgeting.
This class shares most of the content with the first half of MIT’s Master of Finance course 15.415.
Course Materials
§ Recommended Textbook: Brealey, Myers, and Allen, Principles of Corporate Finance (13e), Irwin/McGraw
Hill. (BMA)
§ Recommended Textbook: Bodie, Kane, and Marcus, Investments (11e), Irwin/McGraw Hill. (BKM)
Course Structure
This course consists of:
§ A course introductory lecture (Week 0);
§ 10 Lectures, 10 Problem Sets, 10 Recitations demonstrating how to solve problems similar to those
contained in the problem sets (Weeks 1–10); and
§ 1 proctored Final Exam (Week 11)
Week 0
Course Introduction and How to Take this Course
Prof. Egor Matveyev
Introduction to Finance
§ Financial decisions of households and corporations
Week 1 § Approaches to valuing financial and real assets
Prof. Jiang Wang § An overview of the financial market and its role
§ Unifying principles of finance
Problem Set 1
Common Stocks
Week 5 § Discounted Cash Flow (DCF) model
Prof. Leonid Kogan § Gordon model, multi-stage growth model
§ Forecasting dividends
§ Valuation of growth opportunities and valuation multiples
Problem Set 5
Risk
§ Decision under uncertainty and expected utility theory
Week 6 § Risk aversion
Prof. Leonid Kogan § Diversification and portfolio analytics
§ Systematic and idiosyncratic risks
Problem Set 6
Market Efficiency
Week 8 § Efficient Market Hypothesis (EMH)
§ Implications of EMH
Prof. Leonid Kogan
§ Empirical evidence on EMH
Problem Set 8
Capital Budgeting I
§ NPV rules
Week 10 § Cash flows from capital investments
Prof. Jiang Wang § Project interactions
§ Alternative capital budgeting rules
Problem Set 10