Faculty
Marcel Marekwica

Course Coordinator
Bjarne Florentsen

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 in the final year of their bachelor studies that intend to apply for a master program in “Finance and Accounting”, “Finance and Strategic Management” or “Applied Economics and Finance”.

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.

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 are 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, two “training sets” having roughly the length of an exam set will provide you with an additional opportunity of checking yourself.

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 the ability to

· Formalize verbally expressed problems in a mathematical way and identify ways to solve such problems

· Identify, classify and apply concepts suited for solving a given problem.

· Give economic interpretations to mathematical relations / results.

4 hour written final exam “open book”, “written aids”: Students are allowed to bring calculators approved by CBS as well as written aids like books and notes to the final exam. Computers, however, may not be used throughout the final exam.

The main reference for the course will be:

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