Why do we study the theory? Managers learn from experience how to cope with routine problems. but the best manager are also able to respond to change. to do this you need more than time-honored rules of thumb you must understand why companies and financial markets behave the way they do. In other words, you need a theory of fil nance Good theory helps you grasp what is going on in the world around you. It helps you to ask the right questions when times change and new problems must be analyzed It also tells you what things you do not need to worry about.---------Brealey and MyersWhy do we study the theory？ • Managers learn from experience how to cope with routine problems. But the best manager are also able to respond to change. To do this you need more than time-honored rules of thumb; you must understand why companies and financial markets behave the way they do. In other words, you need a theory of finance.……Good theory helps you grasp what is going on in the world around you. It helps you to ask the right questions when times change and new problems must be analyzed. It also tells you what things you do not need to worry about.---------Brealey and Myers