FM Exam
Workshop
Sean Ke
Basic Introduction - Registration
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Exams provided every two months. (even #)
Register at www.soa.org
Fees: \$225
Related class: Math 172A
Basic Introduction - Content
Financial Mathematics
• Interest Theory
Time Value of Money, Annuities, Loans, Bonds, Cash
Flow and Portfolios,Immunization.
• Financial Economics (Derivative Market)
Derivative, Options, Forwards and Futures, Swaps,
Hedging and investment Strategies.
Basic Introduction - Materials
• Interest Theory
– Mathematics Interest Theory (2nd Edition)
• Chapter 1 – 9 (excluding 1.13, 3.10 3.12, 4.7, 5.5, 6.7,
6.8, 6.10, 7.2-7.4, 9.5; 8.3 only for Chapter 8.)
• Financial Economics (Derivative Market)
– A Basic Course in the Theory of Interest and
Derivatives Markets
• Chapter 57 - 74
Basic Introduction - Materials
• SOA Sample questions for both interest theory
(73) and Financial Economics (34).
• Study Manual
– ASM (Hard)
– Actex (Easy)
– Guo Yufeng (Shortcuts & methods)
Basic Introduction – Exams
• 35 multiple-choice questions. 3 Hours.
– Average: 5 mins per question.
– 5 testing questions, not graded.
– 30 questions graded, 70% - passed.
• 65 – 80% interest theory
• 20 – 35% financial economics
• Immediately know the result
Basic Introduction – Calculator
Yes, you can bring 2 calculator!
BA II Plus & TI – 30XS (MultiView)
Break-Downs – Interest Theory
1.Time Value of Money (5-15%) Easy
Play around with interest rate!
Monthly, effective, nominal, discount, simple, compound,
force of interest, convertible….
Break-Downs - Interest Theory
2.Annuities (5-20%) Medium
3.Loans (5-20%) Medium
4.Bonds (5-20%) Medium
Deal with multiple payments.
Break-Downs - Interest Theory
5.General Cash flows and Portfolios (5-20%) Hard
6.Immunization (5-15%) Medium
Break-Downs – Financial Economics
1. General Derivatives (0-5%) Easy
2. Options (0-5%) Easy
3. Forwards and Futures (0-10%) Easy
Break-Downs – Financial Economics
4. Swaps (0-5%) Medium
5. Hedging and Investment Strategies (5-15%) Hard
Some Tips
• Distribute your time according to percentage
of the break-downs.
• Start from Easy, and make sure you are
comfortable with both Easy and Medium parts
• Do sample exams at
https://www.soa.org/Education/ExamReq/Syllabus-Study-Materials/edu-exam-ponline-sample.aspx
Some Tips
Questions you don’t know how to solve?
• Bring the answers to the question.
• Eliminate some obviously wrong answers and
pick one. No penalty for wrong answers.
Some Tips
Example:
Kathryn deposits 100 into an account at the beginning of each 4-year period
for 40 years. The account credits interest at an annual effective interest rate
of i.
The accumulated amount in the account at the end of 40 years is X, which is 5
times the accumulated amount in the account at the end of 20 years.
Calculate X.
(A) 4695
(B) 5070
(C) 5445
(D) 5820
(E) 6195
Some Tips
Useful Websites
• http://www.beanactuary.org
• http://www.actuarialoutpost.com/actuarial_di
scussion_forum/
• www.soa.org
Some Tips