15.401 | Fall 2008 | Graduate
Finance Theory I


Course Meeting Times

Lectures: 2 sessions / week, 1.5 hours / session

Recitations: 1 session / week, 1.5 hours / session


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.

Course Requirements and Grading

Course requirements include regular attendance and participation in class, readings from the textbook, one case study, and the midterm and final examinations. There are no required problem sets. However, we provide optional problem sets and solutions in the form of the MIT Sloan Finance Problems and Solutions Collection, and the majority of the questions on the midterm and final examinations will be taken verbatim from this document. The following weighting scheme will be used to determine each student’s course grade:

Class participation 10%
Acid Rain case study write-up 10%
Midterm exam 25%
Final exam 55%
Course Info
As Taught In
Fall 2008
Learning Resource Types
grading Exams with Solutions
notes Lecture Notes
theaters Lecture Videos
assignment_turned_in Problem Sets with Solutions