This course is discontinued

ECON4515 – Finance Theory 1: Portfolio choice and equilibrium models

Schedule, syllabus and examination date

Choose semester

Course content

The course will cover the following topics:

  • Individual decision-making under uncertainty, in particular expected utility and the mean-variance criterion
  • Portfolio choice and separation
  • Capital asset pricing models (also without riskless asset) and complete markets for state contingent claims, spanning, consequences for investment decisions
  • Market efficiency, information paradox
  • Welfare theory under uncertainty

Learning outcome

Knowledge outcomes
You will learn the basic theory of portfolio choice and different equilibrium models for financial markets under one-period uncertainty. An important part of this is knowledge about when, how, and to what extent the models are applicable. The course also gives some knowledge of empirical research on this. Moreover, you will learn about implications of the theory for capital budgeting and financing decisions in the private sector. The course also looks at welfare theory under uncertainty, and at some consequences for social decision making.

You will learn how to use the various measures of risk for individual assets and for portfolios. This includes what sources can be used to estimate these, how they are calculated, and how they are affected by, e.g., combining assets. You will be able disentangle information about real-world assets, e.g., financial assets (and loans), to find the relevant measures of risk and expected returns. You will learn how to introduce relevant concepts of risk both in theoretical and practical considerations.


Students who are admitted to study programmes at UiO must each semester register which courses and exams they wish to sign up for in Studentweb.

If you are not already enrolled as a student at UiO, please see our information about admission requirements and procedures.


Formal prerequisite knowledge

Bachelor's degree in Economics, or equivalent

Recommended previous knowledge

Mathematics at least at the level of ECON3120 – Mathematics 2: Calculus and Linear Algebra / ECON4120 – Mathematics 2: Calculus and Linear Algebra. This math course may be taken in parallel with ECON4515 – Finance Theory 1: Portfolio choice and equilibrium models (discontinued). Some background in statistics (at least at the level of ECON2130 – Statistikk 1).

Overlapping courses


Lectures: 2 hours a week throughout the semester.

Seminars: 2 hours a week through parts of the semester.

There will be given one compulsory term paper.

If the compulsory term paper is not approved, students will have a new attempt by handing in a new paper. A student who still not succeed, will not be permitted to take the exam in this course.

Access to teaching

A student who has had the compulsory term papers approved, is not entitled to hand in the term papers again. A student who has previously been admitted to the course, but who has not completed the compulsory term papers, is entitled to repeat the course, contingent on available capacity.


A 3-hour written school exam. Students are not allowed to present themselves to the written school exam if the compulsory term paper is not approved.

Examination support material

No examination support material is allowed.

Language of examination

The problem set will be given in English. Answers can be given in Norwegian, Swedish, Danish or in English. See § 5.4 in Regulations governing studies and examinations at the University of Oslo.

Grading scale

Grades are awarded on a scale from A to F, where A is the best grade and F is a fail. Read more about the grading system.

Explanations and appeals

Resit an examination

Students who might wish to retake the exam later, are not guaranteed that the course is ever repeated with a similar reading list, nor that the exam arrangement will be the same.

Withdrawal from an examination

It is possible to take the exam up to 3 times. If you withdraw from the exam after the deadline or during the exam, this will be counted as an examination attempt.

Special examination arrangements

Application form, deadline and requirements for special examination arrangements.

Facts about this course






This course was given for the last time spring 2008, and will not be given again.


Exam will be given autumn 2008 for studentes who have had the compulsory term paper approved in a previous semester.

Teaching language