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 15 - Portfolio Theory III & The CAPM and APT I |
This lecture introduces the tangency portfolio and the Sharpe ratio as a measure of risk/reward trade-off. And the last 26-minute part of this video begins with a review of portfolio theory and presents the expected return of efficient portfolios as in the capital asset pricing model. The significance and implications of the Sharpe-Lintner CAPM are then discussed.
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