This course gives a survey of business finance, managerial decision-making, and the main capital markets (stocks, bonds, etc.). We explore the role of capital markets in the flow-of-funds between savers and investors, their role in risk redistribution and in providing incentives to managers. Among the main topics are: risk and return tradeoffs, models of stock and bond prices, the capital asset pricing model, financial derivatives (options, futures, swaps), hedging, and "efficient markets" theories of financial markets. Format: lecture. Requirements: problem sets, papers, midterm, and final exam. Prerequisites: two courses in economics. Some basic knowledge of calculus and descriptive statistics is required. Students are expected to use spreadsheets for assignments. Enrollment limit: 30 (expected: 25). Open to sophomores.