This course is intended as an introduction to the financial characteristics and income taxation of basic financial instruments, consisting most fundamentally of (1) debt, (2) common stock, and (3) options. In each instance we will look at the financial characteristics of the security (after the fashion of an MBA offering in investments or corporate finance), then study the basic tax rules governing each class of instrument. Time permitting we will also look at the treatment of some of the more exotic derivative securities that have come to play so pivotal a role in corporate finance, including forward and futures contracts as well as notional principal contracts. Because the process of discounting is so central to an understanding of financial contracts, the course will begin with a rigorous study of discounting, including a laboratory introduction to the computation of present values using the financial functions of Microsoft Excel. Students who have not yet taken introductory tax should consult the instructor before registering.