The module focuses on the theoretical foundations and empirical aspects of portfolio management and asset pricing. The process of asset allocation is defined. In addition, the module examines what determines the price of financial instruments traded on the capital market. Participants will explore the question of which criteria rational actors can use to orientate themselves when making investment decisions under uncertainty. They will discuss how efficiently information is processed on the capital market and whether the behaviour of investors is compatible with the assumption of rational actors. The module also discusses how the performance of investment strategies can be measured and assessed in terms of causation.