This course is designed to provide a sound foundation for the fundamental concepts in investments. Topics covered include models of risk and return (including the CAPM and multifactor models); stock market valuation; the term structure of interest rates; portfolio selection based on mean-variance analysis; performance evaluation; market efficiency and derivative security pricing (including options, futures, forwards, and swaps). Students who master the course material will acquire the analytical tools and financial theory necessary for making good investment decisions and understanding the paradigms by which financial securities are valued.
This course is highly quantitative and relies heavily on analytical tools and economic theory developed throughout the course. Students should be comfortable with probability, statistics and regression analysis at the level of Business 41000. Use of a spreadsheet package such as Excel will be vital for the homework assignments, saving time and aiding in understanding the material. Some use of calculus and linear algebra will also be required. Cannot enroll if 20400 taken previously.
• Textbook: Bodie, Zvi, Alex Kane, and Alan Marcus, Investments, Irwin, 12th Edition
• Additional articles: Additional readings and articles will be posted on canvas in advance of each class during the quarter.
• Lecture slides/handouts: Lecture slides will be posted in advance on canvas. The lecture slides provide an outline of the course discussion and some details on the topics covered.
The course requirements are a Midterm exam, a Final exam, six graded homework assignments, and a case write-up. Class participation will also affect your grade. Your course grade will be determined by the maximum of Methods A and B below:
Method A
Midterm 25%
Case Write-up 5%
Problem Sets 15%
Class participation 5%
Final 50%
Method B
Case Write-up 5%
Problem Sets 15%
Class participation 5%
Final 75%
In other words, the Midterm is optional and can only help your grade.
- Allow Provisional Grades (For joint degree and non-Booth students only)
- Early Final Grades (For joint degree and non-Booth students only)
Description and/or course criteria last updated: August 13 2025
