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Practic Exam "FM" Problems - courtesy Actex Publications and Richard L. London, FSA

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  • Practic Exam "FM" Problems - courtesy Actex Publications and Richard L. London, FSA

    Here are 10 sample exam problems courtesy of ACTEX Publications and Richard L. London.
    Actuarial Exam FM / CAS Exam 2 - Sample Problems
    Sample Problem #1 - Solution Problem #1
    Sample Problem #2 - Solution Problem #2
    Sample Problem #3 - Solution Problem #3
    Sample Problem #4 - Solution Problem #4
    Sample Problem #5 - Solution Problem #5
    Sample Problem #6 - Solution Problem #6
    Sample Problem #7 - Solution Problem #7
    Sample Problem #8 - Solution Problem #8
    Sample Problem #9 - Solution Problem #9
    Sample Problem #10 - Solution Problem #10


    ACTEX Publications - http://www.actexmadriver.com/
    Richard L. London, FSA
    Last edited by admin; September 24 2005, 09:43 PM.
    Actuary.com - www.actuary.com
    Email - [email protected]

  • #2
    For some reason question 8 for these sample questions is not showing up. Does anyone have this question available?

    Thanks
    Chris Stuart

    Comment


    • #3
      Originally posted by cdogstu99
      For some reason question 8 for these sample questions is not showing up. Does anyone have this question available?
      Thank you for pointing this out. The link has been repaired and it appears to work now.
      Actuary.com - www.actuary.com
      Email - [email protected]

      Comment


      • #4
        In the Actex FM Manual, page I-7, Observations 2, the solution in the book is (1+0.06/(3/2))^3/2t = 1.04^(1.5t)

        By the equation of the accumulation function with i^(m), I think the solution is a(t) = (1+((0.06)^(3/2))/(3/2))^(3/2t) = 1.009798^(1.5t)

        Am i right? or if i am wrong, can someone explain to me?? or do they have a web site which post all the typo correction of this book??
        Thank you!!

        I have one more question, How can i find the equivalent rates of interest and discount by using BA II Plus Professional??

        Thank you for all your help
        Tears stream down your face
        I promise you I will learn from my mistakes

        Comment


        • #5
          Double T,

          I can't comment on your Actex question (as I don't have the Actex manual
          and so can't entirely follow it). I can comment on your BA II Plus Professional
          question.

          Your calculator doesn't have a specific function to convert from rate of
          interest to rate of discount (or vice-versa). You can of course use
          your calculator to evaluate i=d/(1-d) or d=i/(1+i).

          Comment


          • #6
            Rephrasing example questions

            They need to rephrase some of these sample questions. It is sometimes left out or assumed that you know it is a continual payment or a once only payment on some financial questions, but if you are looking at it the first time you could know how to do the problem but be lead in the wrong direction because of sketchy wording of the problem

            Comment


            • #7
              Here is a link to the errata for the ACTEX FM/2 Study Manual.

              http://www.actexmadriver.com/client/..._FM_Fall07.pdf

              If you have any further questions don't hesitate to give customer service a call 800-282-2839.

              Christine Phelps
              ACTEX Publications
              www.actexmadriver.com

              Comment


              • #8
                Concern about problem #1!

                the interest only cumulate at the end of each year for money Y, so at year 1.5, it can only get the interest for year one.That is, AV1.5=(1+i) rather than (1+i)^1.5? Am I right?
                I think this is an important point need to be clarified clearly, Any suggestions?

                Comment


                • #9
                  Reply from Matt Hassett

                  There is some confusion over Sample exam question 1 on page M1-29 of the ACTEX FM study guide. In solving the equation we assumed that Bruce gets one quarter’s worth of interest for the 29th quarter of his 7.25 years of investment. This gives an equation for δ:

                  100×1.0214.5=100e7.25δ

                  The solution is δ = .0396. This matches the official SOA solution, so the writers clearly intended that this assumption be made.

                  If you assume that “convertible semiannually” means that interest is only paid semiannually, then you could assume that Bruce forfeits the interest on his final quarter. (This is what actually happens if you cash out a CD early. You forfeit some interest.) Then the equation for δ becomes:

                  100×1.0214=100e7.25δ

                  The solution then changes to .0382, but this is not one of the multiple choices –so you can rule out this assumption.

                  The old official text by Kellison discusses the meanings of “compounded”, “payable” and “convertible” on page 17. After discussing the first two terms, Kellison says “The term ‘convertible’ does not seem to possess either connotation. The reader is advised not to rely on such connotations when encountering these terms, but to ascertain exactly how the interest is computed and paid.” In other words, convertible is ambiguous and you need to clarify how it is used in each situation. In my work in finance, there were legal document to review to clarify the intent. In the exam world the clarification is simpler –does your assumption match a multiple choice answer.



                  Matt Hassett PhD,ASA

                  Ph 480 756-4351

                  Comment

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