Course overview The focus of this course is on financial theory and empirical evidence that are useful for investment decisions. The topics include Financial theory: This include portfolio theory, CAPM, APT, discount factor model, they are important for decision-making in investments Empirical study approaches: GMM, Fama-Macbeth regression, time-series, cross-sections test of pricing model, ect Empirical evidence in the equity market. This includes patterns in cross section of stock returns. the time-series behavior of stock returns---time varying expected returns and stochastic volatility Market efficiency and active investments we start with the efficient market hypothesis, which is useful for modeling financial markets. Because efficient market theory is not a perfect description of the reality: some prices are almost certainly" wrong, active investment can have effective results. Topics in active investment include security analysis, active portfolio management, hedge funds, and risk management issuesCourse overview • The focus of this course is on financial theory and empirical evidence that are useful for investment decisions. The topics include: • Financial theory: This include portfolio theory, CAPM, APT, discount factor model, they are important for decision-making in investments; • Empirical study approaches: GMM, Fama-Macbeth regression, time-series, cross-sections test of pricing model, ect. • Empirical evidence in the equity market. This includes patterns in cross￾section of stock returns, the time-series behavior of stock returns---time varying expected returns and stochastic volatility. • Market efficiency and active investments: we start with the efficient market hypothesis, which is useful for modeling financial markets. Because efficient market theory is not a perfect description of the reality: some prices are almost certainly ‘wrong’, active investment can have effective results. Topics in active investment include security analysis, active portfolio management, hedge funds, and risk management issues