Since Markovitz put forward the Modern Portfolio Theory (MPT) as a Ph.D candidate at the University of Chicago in 1952, both great masters and theoretical innovations have being coming out one after the other. It is just like human intellectual gymnastics at the highest level. How amazing! The M-M theorem, CAPM (Capital Asset Pricing Model), APT (Arbitrage Pricing Model), EMH (Effective Market Hypothesis), B-S (Option Pricing Formula), and BF (Behavioral Finance) won the Nobel Prizes in Economics respectively in 1990, 1997, 2013 and 2017.

Investments is the first lesson leading to these great, practical and beautiful classic theories. Investments focuses on how rational investors optimally allocate limited resources to financial assets cross multiple periods under uncertainty. Its core is based on the principle of maximizing expected utility to obtain the optimal solution for investors’ asset allocation. In this way, when the whole market is in equilibrium and all investors reach their optimal asset allocation, the financial assets equilibrium price rule can be found and all financial assets can thus be properly priced.

Investments belongs to microfinance course. Coming from the microeconomics, it is the most important basic compulsory course for finance related majors. Learning this course will help you build a solid foundation to study other financial courses.