MIT SLOAN SCHOOL OF MANAGEMENT

15.415 Finance Theory, Sections A&B
Spring 1999

S. C. Myers, MIT E52-451

This subject covers modern capital market theory and some of its applications to corporate finance. The sequence of topics follows Principles of Corporate Finance by Brealey and Myers, but many topics will be covered in more depth than that text provides. The second required text, Taggart's Quantitative Analysis for Investment Management, provides additional formulas and technical details.

15.415 is a prerequisite for all finance electives except 15.437 and for the Financial Management and Financial Engineering Tracks.

There will be two midterms, each counting for 25% of the grade and a final exam counting for 50%. I will round up final grades, for example B+ to A-, where I see consistent effort and informed class participation.

Regular class sessions are scheduled for Monday, Wednesday and Friday mornings. The Friday classes are generally not "recitations." Several class sessions are earmarked for discussion of problem sets and general review, but many of these fall on Mondays and Wednesdays. Most of these classes will be replaced by small-group meetings with the TAs.

Class notes will be available on the Sloan computer network prior to class. Not all of these notes will be covered in class. In some cases students will be asked to review parts of the notes prior to class.

There will be eight ungraded problem sets. Solutions will be posted on the Sloan computer system. Sixty percent of each midterm grade and 40 percent of the final exam grade will be based on questions which should be easy if the problem sets are conscientiously done and understood.

Information on required texts, TAs, office hours, etc. is summarized on the next page.

Required books and periodicals:

R. Brealey and S. Myers, Principles of Corporate Finance, 5th ed., McGraw Hill, 1996. (B&M)

R. A. Taggart, Jr., Quantitative Analysis for Investment Management, Prentice Hall, 1996.

The Wall Street Journal (daily)

15.415 Readings packet (Graphic Arts)

Recommended:

Z. Bodie, A. Kane and A. J. Marcus, Investments, 4th ed., Irwin, 1999. (B,K & M)

J. Hull, Options, Futures, and Other Derivative Securities 3rd ed., Prentice Hall, 1997.

B. G. Malkiel, A Random Walk Down Wall Street, 5th Edition, W.W. Norton, 1996.

R. S. Wurman, A. Siegel and K. M. Morris, The Wall Street Journal Guide to Understanding Money and Investing, Prentice Hall College Edition, 1993. (An elementary but very useful book for students with limited background in finance.)

Teamwork

Problem sets and case preparation can be done by groups.

Teaching Assistants

Office Hours

I will be in my office from 1 - 4 p.m. on Wednesdays. If this is inconvenient, check with Gretchen Schroeder.

Office hours for TAs

(These may change, depending on student demand.)