# 1. Introduction To Quantitative Models ```1. Title of subject
Quantitative Methods in Finance and Economics
2.Subject code
TQM2431
3.Status of subject
Mathematical Sciences
4. Version
Date of Previous Version: Year 2006
Date of New Version : Year 2007
3
28 Hours of Lecture
14 Hours of Tutorial
LAN Credit Hours Equivalence: 2.67
5. Credit hour
6. Semester
Trimester 1 (Gamma Level)
7. Pre-Requisite
None
8. Methods of teaching
28 Hours of Lecture
14 Hours of Tutorial
9. Assessment
50% Coursework
50% Final Exam
Total 100%
10. Teaching staff (Proposed)
Ahmed Mueen
Tong Gee Kok
11. Objective of subject
To enable the students to apply basic quantitative techniques
to economic and business situations, and to understand the
mathematical principles underlying them.
12. Synopsis of subject
The major areas of study include introduction to
mathematical modeling, demand and supply model and
market equilibrium, interest and present value, marginal cost,
profit maximization, production function, utility function,
Bidang utama pembelajaran termasuk pengenalan kepada
model matematik, model penawaran dan permintaan,
keseimbangan pasaran, bunga dan nilai kini, kos sut,
pemaksimuman keuntungan, fungsi pengeluaran, fungsi
utiliti, analisis portfolio dan pembuatan keputusan
perniagaan.
By the end of the subject, students should be able to:
 Have a good foundation of how to solve various problems in
 Describe and interpret key concepts in mathematics of
finance.
 Solve problems on compound interest, annuities,
amortization, Sinking funds, marginal function in economics,
optimisation.
 Have a conceptual grasp of business forecasting, multiple
regression analysis and forecasting economic phenomena.
 Rationalise the rationale behind elementary models of the
firm and the household.
Programme Outcomes
% of
contribution
5
Ability to apply soft skills in work and career
related activities
25
Good understanding of fundamental concepts
30
Acquisition and mastery of knowledge in
specialized area
13. Learning Outcomes
14. Details of subject
Acquisition of analytical capabilities and
problem solving skills
20
5
Cultivation of innovative mind and
development of entrepreneurial
skills
10
Understanding of the responsibility with moral
and professional ethics
5
Topics Covered
1.
2.
3.
Hours
1. Introduction To Quantitative Models
 Mathematical models to solve business
problems.
 The concept of the model.
 Forecasting models
 Decision analysis models
2. Static supply and demand models and
Market Equlibrium
 Sets
 Functions
 Equations.
 Graphs.
3
3. Interest and present value
 Difference equations
 Sequences.
 Limit
3
2
4.
5.
6.
7
8
9
4.Total, average, marginal cost, profit
maximization continuous compounding
 Differentiation
 Inverse function
 Exponential and logarithmic functions
 Profit maximization
5. Production Function
 Partial differentiation
 Chain rule
 Homogeneous function
6. Bundles, preferences, Utility fucntion
 Vector notation.
 Geometry of lines and planes
 Convexity
2
7. Input-output model and Matix methods
in portfolio analysis.
6

Matrix notation

Solution of linear systems.

Inverse matrices.

Eigenvalues and Eigenvector

System of recurrence equations

Macroeconomic Models

Vector Geometry.
8.Elementry model of the firm and the
household

Optimisation of function of two
variables.

Unconstrained and Constrained.

Lagrange multiplier

Integration

Differential equation

Critical points.


Tangent and normal vector.

Tangent hyperplanes and optimal
bundle


Multiple regression analysis.

Time series analysis.

Analysis of variance

Clustering.

Forecasting of economic phenomena
Total Contact Hours
2
2
4
4
28
15. Text
Text Book
Martin Anthony &amp; Norman Biggs,
&quot;Mathematics for Economics and
Finance - Methods and Modelling&quot;,
Cambridge University Press 1996.

Angel de la Fuente,
Mathematical Methods and Models
for Economists, Cambridge
University Press 1999

A.C. Chiang, Fundamental
Methods of Mathematical
Economics, 3rd. edition, London,
McGraw-Hill, 1984.

K. Holden and A.W.
Pearson, Introductory Mathematics
for Economists, revised ed.,
Macmillan, 1988

P. Newbold, Statistics

S. Taylor, Modelling
Financial Time Series, Wiley, 1986.
