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FM Exam Workshop Sean Ke Basic Introduction - Registration • • • • • Exams provided every two months. (even #) Register at www.soa.org Fees: $225 Deadline: About a month before the exam. 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 Manage your study time. • 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 Find your study partners!