PROFESSOR: In this video, I would

like to talk more specifically about our first course,

Foundations of Modern Finance, Part 1.
This course establishes the major principles
that underlie modern finance, such as risk and return, market
efficiency, portfolio theory, diversification,
and arbitrage pricing theory.
In this course, you will learn some of the major tools used
by finance professionals such as how to value an investment,
how to choose between alternative investments,
how to make your own personal investment decisions.
I have been teaching these topics to our students
at MIT Sloan, and I'm excited to offer
this course to all of you.
Let me talk more specifically about the structure
of this course, and how to succeed in taking it.
This is an instructor-based course,
meaning that we will release content each week on Wednesday.
So Wednesday marks the beginning of each new week of content.
Each week's content has three components.
The first component is the lecture videos
that deliver the main content.
Throughout our lecture videos, we
have developed concept checks.
These concept checks are designed
to help you understand the content and some
of the salient points of each of the finance concepts.
Second, each week also contains material
that shows you the most common questions related
to each topic, and how to solve these questions.
We call this part of the content recitations.
This part of the course is critical.
Not only shows you how to solve these common problems.
It also prepares you to be able to solve questions
on problem sets, and eventually on the final exam.
As I often tell my students, finance
is not a spectator sport.
You learn by doing, and by solving problems.
Third, and final part of each week's content
are problem sets.
Problem sets are due each Tuesday before the start
of the new week on Wednesday.
It is important to solve these questions on time,
and to not fall behind.
The content in our course is cumulative.
For example, if you do not understand
what is a perpetuity in week 3 and how
to find its present value, you will not
be able to understand one of the major tools in valuing stocks--
namely, the dividend discount model
which we developed in week 5.
Because of this cumulative nature of the material,
we will not extend the homework deadlines.
You have to make an effort to finish each homework on time.
Together, homeworks account for 10% of your final grade.
My advice to you is to allow yourself time to learn.
We have designed this course so that it
can take anywhere between 5 and 10 hours of work
each week to learn the material and finish the homework,
depending on your level of preparation
and your background.
It is important that you plan ahead and allow your self
sufficient time to go through the course.
The course culminates in a two-hour final exam.
This exam constitutes 90% of your final cumulative score.
You are required to get at least 60% of the cumulative score
in order to pass this course, and to obtain the certificate.
We have posted a sample final exam for your review
on our website.
Finally, let me mention that this course has
two important prerequisites--
calculus and linear algebra.
You should be familiar with the concept of a derivative,
and be able to differentiate functions.
You should also be able to solve systems of linear equations,
understand what is a matrix, and be able to invert them.
This course is challenging, but very exciting.
We have designed it with clarity in mind,
but without sacrificing the rigor of finance education
at MIT.
Earning a certificate in this course
means to satisfy the standards of understanding
the fundamental finance principles
which we require from our students at MIT.
So welcome, and let's learn some finance.