Quantitative Methods

Module description

This module is intended for Financial Services Professional Degree Apprenticeship students who are looking to develop a sound knowledge in the quantitative concepts and applications that are fundamental to financial analysis. It introduces quantitative methods that are used widely in securities and risk analysis and in corporate finance to value capital projects and select investments.

This module provides students with a foundation in descriptive statistics which provide the tools to characterise and assess risk and return and other important financial or economic variables. It also introduces the fundamental quantitative techniques that are essential for a financial analyst, such as basic statistics, probability theory and regression analysis that support investment and risk decision making in the presence of uncertainty.

Full module specification

Module aims

The general aim of this module is to introduce quantitative concepts and techniques used in financial analysis and investment decision making. The module enables you to master the numerous applications of time value of money (TVM) or discounted cash flow analysis. It presents a selection of important TVM applications: net present value and internal rate of return as tools for evaluating cash flow streams, portfolio return measurement, and the calculation of money market yields.

The module presents the essential probability tools needed to frame and address many real-world problems involving risk. Students will apply tools to such issues as predicting investment manager performance, forecasting financial variables and pricing bonds. The module explores in detail the concepts that are most important to investment research and practice. It aims to develop students’ ability to apply a range of tools that uses asset price, trading volume and other data for making investment decisions.

Skills acquisition: You will develop a range of transferable skills required in making investment decision in an environment of risk. 

Research in teaching: The module builds on recent investment management research within the finance disciplines to define decision making tools and theories.

The module is supported by a series of webinars, videos, group forums, learning logs, online reading material, and facilitated online group sessions will be offered in addition to a masterclass.

ILO: Module-specific skills

• 1. Understand the numerous applications of time value of money and discounted cash flow applications
• 2. Explain the statistical methods that summarise return distributions and apply probability concepts to investment decision making
• 3. Identify the most appropriate method to solve counting problems
• 4. Apply a range of tools that uses asset price, trading volume and other data for investment decisions
• 5. Evaluate quantitative methods such as hypothesis testing, regression analysis and time-series analysis
• 6. Use sample information to estimate population parameters
• 7. Describe some of the main tools in technical analysis

ILO: Discipline-specific skills

• 8. Acquire specific skills in using portfolio expected return and variance
• 9. Apply statistical techniques to financial data and interpret the statistical results for investment decision making
• 10. Apply quantitative skills to investment research and practice.

ILO: Personal and key skills

• 11. Develop a range of skills required when identifying and communicating risks to the relevant parties
• 12. Apply statistical knowledge in providing flexible and innovative solutions as appropriate to their role
• 13. Understand the approach to gather appropriate facts and evidence in order to make decision effectively using a structured approach.

Learning activities and teaching methods (given in hours of study time)

Details of learning activities and teaching methods

Formative assessment

Summative assessment (% of credit)

Details of summative assessment

Details of re-assessment (where required by referral or deferral)

Re-assessment notes

Defer – as first time

Refer – capped at 40%

Syllabus plan

• The Time Value of Money
• Discounted Cash Flow Applications
• Statistical Concepts and Market Returns
• Probability Concepts
• Common Probability Distributions
• Sampling and Estimation
• Hypothesis Testing
• Technical Analysis

Indicative learning resources - Basic reading

Basic reading:

• Quantitative Methods, CFA® Program Curriculum Level I Volume I, CFA Institute.
• Anderson, D.R., Sweeney, D.J., Williams, T.A., Freeman, J. and Shoesmith, E. (2010) Statistics for Business and Economics, Second Edition, Cengage.
• Brooks, C. (2008) Introductory Econometrics for Finance, Second Edition, Cambridge University Press.
• DeFusco, R.A., McLeavey, D.W., Pinto, J.E. and Runcle, D.E. (2007) Quantitative Investment Analysis, Second Edition, US: Association for Investment and Management Research.

Module has an active ELE page?

Yes

Origin date

28/02/2019

Last revision date

15/03/2019