The organization and structure of this book distinguish it from others in the field. Existing textbooks parallel the historical development of finance—i.e., the capital asset pricing model (CAPM) is the central topic, with arbitrage pricing theory delegated to an isolated chapter. The present book breaks with this tradition. The material is presented in a logical progression, from the simple to the complex, necessarily implying that arbitrage pricing theory comes first and equilibrium models (like the CAPM) second. Arbitrage pricing theory, therefore, constitutes half the text; equilibrium pricing theory constitutes the other half. The CAPM constitutes only two chapters. The materials is presented in an integrated and unified fashion.