This course offers the financial theory and quantitative analytical tools necessary for understanding how stock, bond, and option prices are determined, and provides the skills required to make sound investment decisions. The course combines a theoretical framework with applied analysis. Topics covered include: portfolio selection based on mean-variance analysis, models of risk and return (including the CAPM and multifactor models), performance evaluation of mutual funds and hedge funds, market efficiency and the random walk hypothesis, asset pricing anomalies and behavioral finance, derivative security pricing (including options, futures, forwards, and swaps), and the term structure of interest rates.

No strict requirements but familiarity with the material covered in Business 30000, 33001, and 41000 (or 41100) is expected. Students must be comfortable with statistics, linear and matrix algebra, calculus, and microeconomics at the level of the above courses. Familiarity with a spreadsheet package such as Excel is vital. Cannot enroll in BUSN 35000 if BUSN 20400 taken previously.

The main text used for the course is Bodie, Kane, and Marcus, Investments. The course Canvas site will contain supplemental readings, cases, and articles.

Based on 5-6 homework assignments, a case write-up and discussion, a mid-term, and a final. Class participation will also play a role. No pass/fail grades. No auditors. For joint degree students, college students and other non-Booth students, can provide provisional grades but no early final grades.