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2014/2015  BA-BHAAV1742U  Quantitative Methods in Finance and Economics

English Title
Quantitative Methods in Finance and Economics

Course information
Language English
Course ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration One Semester
Course period Autumn
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 60
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Bjarne Florentsen - Department of Finance (FI)
Secretary Louise Bruun Christensen - lbc.fi@cbs.dk
Main academic disciplines
  • Finance
  • Statistics and mathematics
Last updated on 09-04-2014
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.
Course prerequisites
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 written sit-in exam:
Exam ECTS 7,5
Examination form Written sit-in exam
Individual or group exam Individual
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Winter Term
Aids allowed to bring to the exam Limited aids, see the list below and the exam plan/guidelines for further information:
  • Books and compendia brought by the examinee
  • Notes brought by the examinee
  • Allowed calculators
  • Allowed dictionaries
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Description of the exam procedure

Both computer-based answers and hand-written answers are to the exam questions are accepted.
Course content and structure

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. Quantitative Methods are the language required for studying many interesting and important problems in finance and economics. Trying to study such problems without understanding the necessary quantitative methods is a bit like trying to read a book in a language that you are not commanding.

Throughout the course, strong emphasis will be given to relating the theoretical concepts to applications in business management, economics and finance.
The key contents of the course are:

  • Linear Algebra
  • Calculus
  • (Constrained) Optimization

Some study lines offer mandatory course like "Kvantitative methoder" or "Statistics and quantitative methods". These course typically have a very different focus than Quantitative Methods in Finance and Economics in that they typically focus on statistical methods as opposed to linear algebra, calculus, and optimization methods. It therefore makes sense to choose Quantitative Methods in Finance and Economics even if you have followed such a course.

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
Further Information
Changes in course schedule may occur.
Wednesday 08.00-10.35, week 36-47.
Expected literature

Indicative textbook:
Sydsæter, K. and P. Hammond (2012): Essential Mathematics for Economic Analysis, Pearson Education / Prentice Hall, 4th 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 09-04-2014