Financial Markets Theory : Equilibrium Efficiency and Information This work now in a thoroughly revised second edition presents the economic foundations of financial markets theory from a mathematically rigorous standpoint and offers a self contained critical discussion based on empirical results. It is the only textbook on the subject to include more than two hundred exercises with detailed solutions to selected exercises. Financial Markets Theory covers classical asset pricing theory in great detail including utility theory equilibrium theory portfolio selection mean variance portfolio theory CAPM CCAPM APT and the Modigliani Miller theorem. Starting from an analysis of the empirical evidence on the theory the authors provide a discussion of the relevant literature pointing out the main advances in classical asset pricing theory and the new approaches designed to address asset pricing puzzles and open problems (e.g. behavioral finance). Later chapters in the book contain more advanced material including on the role of information in financial markets non classical preferences noise traders and market microstructure. This textbook is aimed at graduate students in mathematical finance and financial economics but also serves as a useful reference for practitioners working in insurance banking investment funds and financial consultancy. Introducing necessary tools from microeconomic theory this book is highly accessible and completely self contained Prerequisites Choices under Risk Portfolio Insurance and Saving Decisions General Equilibrium Theory and No arbitrage Factor Asset Pricing Models: CAPM and APT Multi period Models: Portfolio Choice Equilibrium and No arbitrage Multi period Models: Empirical Tests Information and Financial Markets Uncertainty Rationality and Heterogeneity Financial Markets Microstructure Solutions of Selected Exercises