Finance theory is a phrase that encompasses under its umbrella portofolio theory, the capital asset pricing model, call option pricing, and arbitrage pricing theory; in sum, it includes those models most often associated with financial economics. In the late 1960s and early 1970's, the field was most closely associated with the capital asset pricing model (CAPM), as evidenced by the emergence of classic texts basically devoted to that topic. Since that time, finance theory has expanded and matured and arbitrage pricing theory and such areas as option pricing have assumed increasing importance, both in research and applications.