CONCORDIA UNIVERSITY 
FINA 385: Theory of Finance I 
Comprehensive Study and Exam Preparation Guide 2025 
 
Part 01: About This Guide 
Part 02: Sample Examination Paper 
Part 03: Detailed Solutions and Explanations 
Part 04: Proven Exam Strategies and Tips 
 
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Concordia University - FINA 385: Theory of Finance I

C$25.00

ACADEMIC YEAR 2025 - 2026

University	Concordia University
Department	Finance
Course Code	FINA 385
Course Name	Theory of Finance I
Notes Title	Comprehensive Study and Exam Prep. Guide
Format	PDF
Page Length	28

Get exam-ready for FINA 385: Theory of Finance I (Concordia) with a focused, student-friendly guide. See exactly how the final is assessed and structured, the question formats you’ll face, and the common pitfalls to avoid. Topic-by-topic notes provide a clear framework for the course, highlighting the core concepts and methods you need to know. Practise with exam-style questions and apply ideas through clear, worked examples that show expected presentation and reasoning. Use it to plan efficient revision, check understanding quickly, and build the confidence to perform on test day.

FINA 385: Theory of Finance I - is the first of two that provide a theoretical foundation upon which subsequent 400 level courses will be built. The course explores how capital is allocated in financial markets and how the relative prices of financial assets are determined. Main topics to be covered include utility theory, arbitrage pricing theory (APT), and asset pricing models such as the Capital Asset Pricing Model (CAPM) and option pricing models. Practical applications are emphasized, including arbitrage, market design, and how individuals and firms strategically respond to market changes and imperfections. Additional areas of study include portfolio theory, bond yields and duration, and option pricing theory.

By the end of the course, you will be able to apply CAPM and other multifactor models to estimate returns, compute forward rates using bond bootstrapping, and determine risk-premium, expected return, and certainty equivalents for risky investments. You will analyze various risk metrics, including standard deviation, skewness, kurtosis, the Sharpe ratio, the Treynor measure, and Value at Risk (VaR). You will also determine risk premia within the Ross APT framework and price European options using the Binomial and Black-Scholes models. In addition, you will conduct regression analysis on multifactor asset pricing models, interpret the results, and perform first-order unconstrained optimization in financial decision-making.

Prerequisites for this course include COMM 220 and COMM 308.

COURSE CODE	COURSE NAME
ACCO 230	Introduction to Financial Accounting
ACCO 310	Financial Reporting I
ACCO 320	Financial Reporting II
ACTU 256	Mathematics of Finance
COMM 215	Business Statistics
COMM 217	Financial Accounting
COMM 220	Analysis of Markets
COMM 222	Organizational Behaviour and Theory
COMM 223	Marketing Management
COMM 305	Managerial Accounting
COMM 308	Introduction to Finance
COMM 315	Business Law and Ethics
ECON 201	Introduction to Microeconomics
ECON 203	Introduction to Macroeconomics
ECON 221	Statistical Methods I
ECON 222	Statistical Methods II
ECON 301	Intermediate Microeconomic Theory I
ECON 421	Econometrics I
ECON 423	Topics in Applied Econometrics
FINA 385	Theory of Finance I
FINA 395	Theory of Finance II
FINA 411	Portfolio Management
FINA 412	Options and Futures
PSYC 315	Statistical Analysis I
STAT 250	Statistics
STAT 460	Time Series and Forecasting

Concordia University - FINA 385: Theory of Finance I

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