,Principles of Finance
Written for the MBA or undergraduate first course in finance, as well as follow-on courses, this text-
book provides a clear, accessible, and thorough explanation of the principles of finance, how they
connect to real-world practice, and how they are used to solve problems.
Structured around ten unifying principles representing the core tenets of the science, this book
imparts basic financial concepts irrespective of the institutional framework, ensuring that students
learn about finance in a way that is applicable both now and into the future.
Pedagogical features include learning objectives and major takeaways, applications in the world of
business, numerous worked examples, key equation boxes highlighting the most important finan-
cial equations, Quick Check questions with solutions, key finance terms with a detailed glossary,
and more than 380 homework problems. Online resources include a solutions manual, a detailed
instructor manual to adapt the book to your course, lectures slides, and an 800-question test bank for
instructors.
Zvi Bodie is Professor Emeritus at Boston University, where he was the Norman and Adele Barron
Professor of Management. He has served on the finance faculty at the Harvard Business School
(1992–1994) and MIT Sloan School of Management (2008–2009). Among his many published books
and textbooks is the best-selling Investments textbook, with Alex Kane and Alan Marcus.
Robert C. Merton is the School of Management Distinguished Professor of Finance at the MIT Sloan
School of Management and John and Natty McArthur University Professor Emeritus at Harvard
University. Merton received the Alfred Nobel Memorial Prize in Economic Sciences in 1997 for a new
method to determine the value of derivatives.
Richard T. Thakor is Associate Professor of Finance at the University of Minnesota, Carlson School
of Management. He is a research affiliate at the MIT Laboratory for Financial Engineering (LFE) and
at the WFA Center for Finance and Accounting Research (WFA-CFAR) at Washington University in
St. Louis. He has published numerous academic articles in top economics, management, and finance
journals, and has won multiple teaching awards.
,PRINCIPLES
OF FINANCE
ZVI BODIE
Boston University
ROBERT C. MERTON
Massachusetts Institute of Technology
RICHARD T. THAKOR
University of Minnesota
, Shaftesbury Road, Cambridge CB2 8EA, United Kingdom
One Liberty Plaza, 20th Floor, New York, NY 10006, USA
477 Williamstown Road, Port Melbourne, VIC 3207, Australia
314–321, 3rd Floor, Plot 3, Splendor Forum, Jasola District Centre, New Delhi – 110025, India
103 Penang Road, #05–06/07, Visioncrest Commercial, Singapore 238467
Cambridge University Press is part of Cambridge University Press & Assessment,
a department of the University of Cambridge.
We share the University’s mission to contribute to society through the pursuit of
education, learning and research at the highest international levels of excellence.
www.cambridge.org
Information on this title: www.cambridge.org/highereducation/isbn/9781108833813
DOI: 10.1017/9781108982610
© Zvi Bodie, Robert C. Merton, and Richard T. Thakor 2025
This publication is in copyright. Subject to statutory exception and to the provisions of
relevant collective licensing agreements, no reproduction of any part may take place
without the written permission of Cambridge University Press & Assessment.
When citing this work, please include a reference to the DOI 10.1017/9781108982610
First published 2025
Printed in Mexico by Litográfica Ingramex, S.A. de C.V
A catalogue record for this publication is available from the British Library
A Cataloging-in-Publication data record for this book is available from the Library of Congress
ISBN 978-1-108-83381-3 Hardback
ISBN 978-1-108-98716-5 Paperback
Cambridge University Press & Assessment has no responsibility for the persistence or
accuracy of URLs for external or third-party internet websites referred to in
this publication and does not guarantee that any content on such websites is,
or will remain, accurate or appropriate.
Written for the MBA or undergraduate first course in finance, as well as follow-on courses, this text-
book provides a clear, accessible, and thorough explanation of the principles of finance, how they
connect to real-world practice, and how they are used to solve problems.
Structured around ten unifying principles representing the core tenets of the science, this book
imparts basic financial concepts irrespective of the institutional framework, ensuring that students
learn about finance in a way that is applicable both now and into the future.
Pedagogical features include learning objectives and major takeaways, applications in the world of
business, numerous worked examples, key equation boxes highlighting the most important finan-
cial equations, Quick Check questions with solutions, key finance terms with a detailed glossary,
and more than 380 homework problems. Online resources include a solutions manual, a detailed
instructor manual to adapt the book to your course, lectures slides, and an 800-question test bank for
instructors.
Zvi Bodie is Professor Emeritus at Boston University, where he was the Norman and Adele Barron
Professor of Management. He has served on the finance faculty at the Harvard Business School
(1992–1994) and MIT Sloan School of Management (2008–2009). Among his many published books
and textbooks is the best-selling Investments textbook, with Alex Kane and Alan Marcus.
Robert C. Merton is the School of Management Distinguished Professor of Finance at the MIT Sloan
School of Management and John and Natty McArthur University Professor Emeritus at Harvard
University. Merton received the Alfred Nobel Memorial Prize in Economic Sciences in 1997 for a new
method to determine the value of derivatives.
Richard T. Thakor is Associate Professor of Finance at the University of Minnesota, Carlson School
of Management. He is a research affiliate at the MIT Laboratory for Financial Engineering (LFE) and
at the WFA Center for Finance and Accounting Research (WFA-CFAR) at Washington University in
St. Louis. He has published numerous academic articles in top economics, management, and finance
journals, and has won multiple teaching awards.
,PRINCIPLES
OF FINANCE
ZVI BODIE
Boston University
ROBERT C. MERTON
Massachusetts Institute of Technology
RICHARD T. THAKOR
University of Minnesota
, Shaftesbury Road, Cambridge CB2 8EA, United Kingdom
One Liberty Plaza, 20th Floor, New York, NY 10006, USA
477 Williamstown Road, Port Melbourne, VIC 3207, Australia
314–321, 3rd Floor, Plot 3, Splendor Forum, Jasola District Centre, New Delhi – 110025, India
103 Penang Road, #05–06/07, Visioncrest Commercial, Singapore 238467
Cambridge University Press is part of Cambridge University Press & Assessment,
a department of the University of Cambridge.
We share the University’s mission to contribute to society through the pursuit of
education, learning and research at the highest international levels of excellence.
www.cambridge.org
Information on this title: www.cambridge.org/highereducation/isbn/9781108833813
DOI: 10.1017/9781108982610
© Zvi Bodie, Robert C. Merton, and Richard T. Thakor 2025
This publication is in copyright. Subject to statutory exception and to the provisions of
relevant collective licensing agreements, no reproduction of any part may take place
without the written permission of Cambridge University Press & Assessment.
When citing this work, please include a reference to the DOI 10.1017/9781108982610
First published 2025
Printed in Mexico by Litográfica Ingramex, S.A. de C.V
A catalogue record for this publication is available from the British Library
A Cataloging-in-Publication data record for this book is available from the Library of Congress
ISBN 978-1-108-83381-3 Hardback
ISBN 978-1-108-98716-5 Paperback
Cambridge University Press & Assessment has no responsibility for the persistence or
accuracy of URLs for external or third-party internet websites referred to in
this publication and does not guarantee that any content on such websites is,
or will remain, accurate or appropriate.
