Finance

by Zvi Bodie, Robert C. Merton

With Bodie/Merton FINANCE, the introductory course becomes the gateway to understanding finance as a scientific discipline based on a set of general principles with a wide range of application. As symbolized by its cover, the text organizes the principles of finance into three analytical "pillars" - optimization over time, asset valuation, and risk management. At the core of each of these pillars are a few basic "laws" and principles that apply across all financial decision-making--from personal decisions about saving, investing, borrowing, and insuring to business decisions about capital budgeting and financing. Moreover, FINANCE adopts a functional orientation to the financial system that permits a truly global perspective from the outset. The principles approach taken by FINANCE contributes to the efficiency of the teaching of finance, both within the introductory course and across the entire program of finance courses offered by a department. It is also more fun to teach than a traditional corporate course because students can relate to more of the topics from their direct needs and because it is easier to relate what they are learning to what they see in the press and elsewhere everyday. At the heart of the efficiency gain is the structure based on principles and the three conceptual pillars of finance that allow a single conceptual development and then its multiple applications to a wide range of otherwise seemingly different financial problems, in corporate finance, in investments, and in personal finance, and in understanding the roles of financial institutions and markets. Similarly, the functional perspective allows an "economy" of knowledge retention for understanding the structure of the financial system that would otherwise require a much more time-consuming description and memorizing of the various institutions used in different times and places to perform these functions. By covering all of this, along with common-to-all-finance analytical principles derived from the conceptual three pillars, in the first course, costly and frustrating-to-the-student repetition of that common material can be eliminated across all subsequent finance courses.

Genres: Finance

479 pages, Hardcover

First published October 28, 1997

About the author

Zvi Bodie is the Norman and Adele Barron Professor of Management at Boston University. He has published widely on pension finance and investment strategy in leading professional journals.

Bodie's books include Foundations of Pension Finance, Pensions in the U.S. Economy, Issues in Pension Economics, and Financial Aspects of the U.S. Pension System. His textbook, Investments, is the market leader and is used in the certification programs of the CFA Institute and the Society of Actuaries. His textbook Financial Economics is coauthored by Robert C. Merton.

He has served on the finance faculty at the Harvard Business School and MIT Sloan School of Management. He sits on the QFINANCE Advisory Board.[citation needed] In 2007 the Retirement Income Industry Association gave Bodie their Lifetime Achievement Award for applied research.

He holds a Ph.D in economics (1975) from the Massachusetts Institute of Technology.