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 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.

Business 30000 and 33001 are recommended. Either 41000 or 41100 is required: strict. This is a quantitative course, meaning that students must be comfortable with statistics, linear algebra, calculus, and microeconomics at the level of the above courses. In addition, students must be familiar with a spreadsheet package such as Excel. Cannot enroll in BUSN 35000 if BUSN 20400 taken previously.

The main text used for the course is Bodie, Kane, and Marcus, Investments. Supplemental readings, cases, and articles will be posted on Canvas.

Grades are based on homework assignments, a case write-up, a midterm exam, a final exam, and class participation. No pass/fail grades. No auditors.