The objective of the course is to develop the basic economic models that can be used to study the valuation of different financial assets and to discuss how to confront the theory with the evidence from financial markets. The course will develop the basic model of investment under uncertainty and discuss portfolio choices in static and dynamic settings as well as market equilibria and the impact of news on the forecast-ability of excess returns. The course will describe valuation in incomplete asset markets (e.g. arbitrage pricing theory) and the extension to the valuation of firms and real estate assets.Prerequisites: Econ 4011, Econ 4021 and Econ 413. 3 units.