SOA Changes 2022-2023
Regarding SOA Changes 2022-2023, the SOA board of directors made changes to the... Read More
You’ll need to pass a total of 10 actuarial exams to be accredited as an actuary – life or non-life regardless.
Of course, the exams will be unique to the actuarial discipline you choose except for the first three – Exam P, Exam FM, and Exam IFM. These are the exams that get you started on the path to actuary status.
As someone seriously looking into traveling the actuarial path, you must be adequately informed about these papers and all the small bits surrounding them. So in this post, you’ll be getting to learn more about SOA Exam FM – one of the preliminary exams.
What is it about? How to sign up for it? How do you prepare to write it? These and more questions are answered in this post.
As mentioned above, Exam FM from the Society of Actuaries is one of the three preliminary professional actuarial exams. It is a multiple-choice test (so are the other two) that takes around 3 hours. You’ll encounter a total of 35 questions, each with A, B, C, D and E as the answer options.
For Exam FM study materials and question banks, click here: https://analystprep.com/actuarial-exams/soa/fm-financial-mathematics-exam/
For a larger part, it’s administered as a computer-based test.
And looking at its name – financial mathematics – you can get a hint of just what it is all about. Yes, it gives you as a candidate an understanding of important aspects of financial mathematics.
But it doesn’t stop there.
You also get exposed to the application of these financial mathematics aspects in determining the present and accumulated values for several streams of cash flows. This will prove crucial down the road in your actuarial work when you’ll be handling things like
But to grasp the said financial mathematics concepts, you should have a rough idea of both calculus and probability. The two feature prominently in handling the aforementioned concepts – and they don’t appear in Exam FM’s syllabus.
This isn’t much of a problem if you have a major in actuarial science, computer science, mathematics, economics, statistics or finance. Each one of them has one or more calculus and probability courses.
Not to worry though.
If your major had nothing to do with calculus or probability, you can take up classes on the same online.
So we’ve mentioned that the core purpose of Exam FM is to teach you about financial mathematics. And as with any syllabus, the whole process of learning is broken down into several topics.
SOA Exam FM’s syllabus comprises of 8 topics and each one of them contributes a certain percentage of questions to the exam. As you’ll see, some will take up a larger portion as compared to others. And still, some may fail to appear to feature in the test.
All the same, it’s always a good idea to polish up on each of these topics adequately no matter how much of the paper you’d expect them to take up. The percentages here are tentative; meaning they’re bound to change.
Over to the topics…
Have a look at what you’ll encounter in each of these topics below.
You can expect the time value of money to take up between 10 and 15% of the whole exam.
Its objective is to impact you with knowledge on current value, accumulated value, and present value. As a learner, you’ll get to know the ins and outs of these three important terms in addition to being able to work out related calculations.
So by the end of it all, here’s what is expected of you:-
This second topic makes up 15-20% of the entire exam. Its prime focus is on current value, accumulated value and present value just like the first topic above.
The difference is that in this case, you’re working out these values specifically for sequences of non-contingent payments.
So what concepts should you be conversant with at the end of this topic? Take a look:-
About 10 to 20% of all questions in this financial mathematics exam will be about loans. And yes, the topic is exactly what you’re thinking of – loans.
It builds you up on fundamental loan concepts and, of course, the accompanying calculations.
Here’s a quick overview of the loan concepts you should be aware of by the end of this topic:-
Pretty straightforward just like loans above. The name points clearly to what this whole topic is – bonds and contributes to about 10 to 20% of the exam questions.
You get a scoop of the important concepts and how to work out the related sums. So what are the expectations of you as a learner by the end of this topic? Glance over the following snippet to find out:-
General cash flows and portfolios covers the nits and grits (that includes calculations) of rates of return, yield curves and measures of duration and convexity. These concepts will make up 15 to 20% of Exam FM.
So by the end of it all, the two parts that should have stuck in you are the definition of terms and the related calculations.
For definition, here are the terms you’ll have to deal with:-
The calculation part here will involve the above definitions for a larger part. Nevertheless, check out this list of what you’d be expected to work out:-
No, it has nothing to do with giving stabs – if that’s what you were thinking; at least not in the traditional sense.
You’ll get to explore the meaning and significance of immunization in the financial world in addition to cash flow matching – of course, including all the calculations that come with these two. These usually take up 10-15% of the whole paper.
As with the above topics, you’ll first be expected to be good with definitions before going to anything else. The essential definitions here are immunization, Redington immunization, and cash flow matching.
The second part of this topic is about building portfolios to meet various objectives. So you’ll be expected to be able to come up with an investment portfolio to:
This topic equips you with an understanding of fundamental interest rate swaps concepts and how to evaluate related numerical problems. Sometimes questions on interest rate swaps may completely fail to feature anywhere in the exam. But usually, they may account for up to 10% of all the questions.
After this topic, it’ll be assumed that you can define
Aside from the definitions, you should be able to calculate the following items of an interest rate swap
The swap here may either be deferred or not and can have a constant or varying notional amount.
Finally, the last topic – determinants of interest rates. It’s tested with the same frequency as the interest rate swaps above – that’s between 0-10 percent of the entire exam.
As per the name, the topic is all about important concepts about determinants of interest rates. Additionally, you’ll meet other concepts about the components of interest; and calculations, of course.
After going through this topic, here are the boxes you should have ticked
All said about the topics said, be sure to keep an eye out on any updates on this syllabus. This page will keep you in the know in case of any changes.
If you’re considering registering for Exam FM, you need to be informed of the process, the dates during which the registration is open, and the payment details – that is the amount and methods of remittance accepted by SOA.
Each one of them is dissected in detail below.
The process is pretty easy – and can be done either online via the SOA website or filling forms and then sending them over. The choice of the method you use depends on your preference.
But it’s easy to see which one of them is better, right?
Whatever your choice, you should keep an eye on that deadline. Naturally, you won’t be accepted if you turn in your information later than the indicated date. The open period usually closes at midnight US Central Time.
That aside, make sure the names you’ll give tally with those on the official identification document you’ll provide – the spellings and the order. Any discrepancies will see your application thrown out.
After handing over your details, you’ll receive an acknowledgment letter with an inactive candidate/eligibility number. This number will be activated in a space of 3-5 business days upon which SOA will send you a letter of confirmation.
And that means you’re in.
So it will be time for you to take the next step – schedule an appointment at a CBT Prometric center. You have 2 options through which you can do this:
But it’ll be meaningless to attempt any of these steps out of the registration window. That’s why you need to keep tabs on the dates.
The registration period runs for 6 weeks (approximately 2 months) before the exam window. So if you want to determine when to register, pinpoint the exam date (usually published on the SOA website) and counting back 6 weeks.
Or you can skip all this by following the lead from SOA on this page.
Of course, there is a cost in sitting for Exam FM – you must pay a sum of $225.
This amount can be paid via any of the following payment methods accepted by SOA-
You should request testing accommodation if you have any condition that affects your ability to sit for exams under the normally provided environment.
And this shouldn’t be a problem as long your case is genuine and doesn’t impact the whole exam process negatively; like giving you an unfair advantage. Read the testing accommodations fine print to get more information about this.
Done with the registration? Now it’s time to gear up for the exam. And it can be an intensive process if you’re doing it alone. That’s why a bit of hand-holding can work wonders.
Here at Analyst Prep, we offer the material and required guidance so that you have all it takes to sit for Exam FM. Here’s a full range of what you’ll have by studying with us. Click here to have a look at all our Exam FM study materials: https://analystprep.com/actuarial-exams/soa/fm-financial-mathematics-exam/
Some spoiler – you get to learn from people who’ve exactly in the same spot as you are right.
After months of trying to (successfully and unsuccessfully) figure out concepts, you’ll have to turn up and put to good use what you gained – at the Prometric center you chose.
As you’d expect, there are rules and regulations set by SOA to ensure everything runs smoothly.
In a nutshell, these guidelines define the exam-related items to have, your conduct in and outside the testing room and so on.
For instance, you have to turn up early enough at the center to allow enough time for some procedures – like verification. Any lateness may mean that you forfeit your chance to sit for the exam.
Check out the comprehensive rules and regulations on this page.
Grading for Exam FM is similar to Exam P.
Scores are evaluated on a scale of 0 to 10. The values that matter start at 6 to 10 – this is the pass mark. So you know where to aim for prospective actuary, don’t you?
As with all SOA exams, you can get to know your Exam FM scores via Online Transcript Access on SOA’s website. You have to give it time though.
It usually takes 8-11 weeks for scores to be available and another week later for the list of passing candidates to be released.
Planning to sit for Exam FM? Let this post guide you through all the steps you’ll take. Everything is simplified for your understanding.
Don’t just sit on the information – get out there and make arrangements. The world needs your actuarial skills.
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