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2012/2013  BA-HA_E15  Quantitative Methods in Finance and Economics

English Title
Quantitative Methods in Finance and Economics

Course information
Language English
Exam ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration One Semester
Course period Autumn
Group A, Wednesday 8:00 to 10:35, week 36-45.

Group B, Wednesday 14.25 - 17.10, week 36-45
Time Table Please see course schedule at e-Campus
Max. participants 60
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Bjarne Florentsen - Department of Finance
Secretary Marianne Andersen - ma.fi@cbs.dk
Main Category of the Course
  • Finance
  • Statistics and mathematics
Last updated on 03-07-2012
Learning objectives
The course will enable students to formalize and solve problems business managers and economists might be facing in their working lives. Emphasis will be given to applying the methods introduced in class for solving problems in finance and economics.

To attain the top grade, students are required to have a good understanding of quantitative methods and their applications. This includes – among others – the ability to:
  • Formalize verbally expressed problems in a mathematical way and identify ways to solve such problems.
  • Identify, classify and apply methods suited for solving a given problem.
  • Give economic interpretations to mathematical relations / results.
  • Generalizing arguments/methods/concepts to problems that have not been analyzed explicitly throughout the course.
Prerequisite
The course is open to all bachelor students seeking not only a qualitative but also a quantitative understanding of key economic concepts. The course is especially recommended for students that intend to apply for a master program in “Finance and Accounting”, “Finance and Strategic Management” or “Applied Economics and Finance”. Students are expected to have a strong mathematical background (corresponding to “A-niveau” in mathematics in Danish high school) or be prepared to make a significant extra effort.
Examination
4 hour open book exam
4 hour open book exam:
Type of test Written Exam
Marking scale 7-step scale
Second examiner No second examiner
Exam period Winter Term, Suggested exam dates: December 3rd or December 4th (to avoid overlaps with other exams/lectures please double-check with me before setting an exam date)
Aids Open Book, Written Aid is permitted
Duration 4 Hours
Examination
4 hour written final exam “open book”, “written aids”: Students are allowed to bring written aids like books and notes to the final exam. Furthermore, students may bring a Hewlett-Packard HP10BII or Texas BAII Plus pocket calculator to the final exam. The use of other calculators or other electronic devices (like e.g. computers) is not permitted.

The make-up/re-exam will be held in the same way and with the same conditions as the ordinary exam.
Course content

The objective of the course “Quantitative methods in finance and economics” is to provide bachelor students with highly desirable quantitative skills required when pursuing a master’s degree. For all bachelor students seeking to apply for some such degree, it is therefore highly recommended to take this course.
Throughout the course, strong emphasis will be given to relate the theoretical concepts to applications in business management, economics and finance.
The key contents of the course are:

  • Linear Algebra
  • Calculus
  • Optimization

Quantitative methods are powerful tools in economics and finance that can help understanding economic phenomena. Fruitful economic applications include, for instance, portfolio optimization, linear regression, interest rate calculations, elasticities, and modeling of uncertainties.
Many economic problems are optimization problems. An important step to solve such problems is to identify the right method. Providing you with a “toolbox” containing several of these methods is a key objective of the course. Even though implementing these models on a computer will not be dealt with in depth in class, the course shall provide you with the necessary background to do so on your own.
To help you deepening your understanding of the contents of the course, you will be given references to recommended exercises in the accompanying book. Furthermore, every week you will receive a set of homework problems, some of which may be old exam questions. Solutions to these problems will be discussed in class at the beginning of the following lecture. A couple of weeks prior to the exam, old exam sets from previous years will provide you with an additional opportunity of checking yourself.
Teaching methods
Lectures
Expected literature

Indicative textbook:
Sydsæter, K. and P. Hammond (2008): Essential Mathematics for Economic Analysis, Pearson Education / Prentice Hall, 3rd edition

This book was chosen as in contrast to many other books it does not only contain questions the students might want to deal with, but also provides them with sample solutions, which might e.g. be helpful when preparing for the final exam.
Last updated on 03-07-2012