This is an introductory course in Finance which covers the basic principles of financial markets and asset pricing. We will discuss different financial instruments and how to use them for investment or hedging purposes. We will proceed to the basics of asset valuation. The starting point will be the present value formula. We will then talk about fixed-income securities, their valuation and the term structure of interest rates. The course will then move to stocks, starting with portfolio theory and then deriving the relation between risk and return. We will study the main asset-pricing models: the CAPM and the APT. We will talk about empirical multifactor models and various risk factors. We will discuss the major asset-pricing anomalies and investment strategies which exploit them. Finally, we will turn to derivatives, their replication and valuation based on no-arbitrage principle, and the use of them for hedging purposes. The course consists of lectures and classes. Each lecture is followed by a class where students solve numeric problems. There are short quizzes in classes and two written home assignments. You must write a quiz in the class to which you are assigned. Attendance of other classes is only permitted in exceptional circumstances, and the class-teachers must be notified in advance. There is a written mid-term test in the middle of the course and a written final test at the end of the course. There is no make-up for the tests. If a student misses a quiz or a written test due to illness, the final grade is determined as follows: Final grade = Cumulative grade/(1-ωi/2), where ωi is the weight of test i. However, a student may miss EITHER a mid-term test OR a final test, but not both. If a student’s cumulative grade is below the pass bar, or if the student missed the both tests, the re-take procedure follows the HSE rules. The course requires a sufficient amount of self-study.