MITx: Foundations of Modern Finance I course Syllabus

Overview: This course provides a rigorous, mathematically grounded introduction to modern finance principles from MIT. Designed for beginners with a quantitative aptitude, it covers core theories essential for careers in finance or further academic study. The curriculum spans approximately 12–16 weeks of part-time study, with a total time commitment of 90–120 hours, including lectures, problem sets, and project work. Modules build progressively from foundational concepts to portfolio and asset pricing theory, culminating in a comprehensive final project.

Module 1: Time Value of Money

Estimated time: 24–32 hours

• Present value and future value calculations
• Discounting and compounding techniques
• Cash flow valuation models
• Applications in investment and loan valuation

Module 2: Risk and Return

Estimated time: 32–40 hours

• Expected return and variance of financial assets
• Risk premiums and investor behavior
• Trade-offs between risk and reward
• Statistical analysis of historical market returns

Module 3: Portfolio Theory

Estimated time: 32–40 hours

• Principles of portfolio diversification
• Efficient frontier and portfolio optimization
• Correlation and covariance in asset returns
• Modern Portfolio Theory (MPT) applications

Module 4: Asset Pricing Fundamentals

Estimated time: 24–32 hours

• Capital Asset Pricing Model (CAPM)
• Market equilibrium and security valuation
• Systematic vs. idiosyncratic risk
• Pricing of financial securities under equilibrium

Module 5: Financial Markets and Investor Behavior

Estimated time: 16–24 hours

• Market efficiency concepts
• Behavioral influences on investment decisions
• Role of information in asset pricing

Module 6: Final Project

Estimated time: 16–20 hours

• Construct and evaluate a diversified investment portfolio
• Apply CAPM and MPT to real-world data
• Submit a comprehensive risk and return analysis report

Prerequisites

• Basic knowledge of algebra and calculus
• Familiarity with probability and descriptive statistics
• Comfort with quantitative reasoning and mathematical modeling

What You'll Be Able to Do After

• Understand and apply core principles of modern financial theory
• Analyze risk-return trade-offs in investment decisions
• Apply time value of money concepts to real-world financial problems
• Evaluate portfolio diversification and asset allocation strategies
• Understand the pricing mechanisms of financial assets and securities