15.401 Finance Theory I
15.401 Finance Theory I (Fall 2008, MIT OCW). Taught by Professor Andrew Lo, 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. (from ocw.mit.edu)
| Lecture 12 - Options III & Risk and Return I |
This lecture continues to cover option pricing by deriving a generalized binomial model, and the implications of the conditions under which the formula holds. And the last 14-minute part of this video gives statistical background and context in preparation for dealing with risk and return. The empirical properties of stock returns are briefly introduced.
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