A Breakdown of the Exams

Written by Hermann Lentchou: IMG8760

The first thing common to all actuarial areas of practice is certainly preliminary actuarial exams. They are necessary to have when one wants to get into the actuarial world.

First, provide yourself with 2 SOA/CAS approved calculators: Texas Instrument TI-30XIIS and TI BAII Plus. Now that you have your 2 calculators, you should put yourself to work.

Actuarial exams are very different and so are their preparations. Exam P for example is shorter (but not easier) than other exams and its concepts are more mathematical (calculus) and logical; it may take you less time to prepare this exam.

Exam FM is more about interest theories with little or no probability. You should be very efficient with your financial calculator in this exam as some shortcuts could save you time. The second part of Exam FM is basic principles of financial derivatives; an introduction to exam MFE.

While preparing for Exam MFE, do not expect to have some recent SOA/CAS exams as the most recent MFE exam released by the SOA is from 2009 but don’t worry, Coaching Actuaries is an excellent way to know what you should be expecting. This exam also has some very long formulas, that’s why having a calculator (TI-30XIIS) that displays what you are calculating is really important.

For these 3 exams preparation time might slightly be the same.

Here come the two BIG exams: Exam MLC and Exam C. Exam MLC has really been weird lately; it used to have a high passing percentage then suddenly (in May 2012) SOA decided to change things (structure and contents) and it will change again in Spring 2014.

The particularity with MLC is that there is a great correlation between almost every module as well as with Exams P and FM. You should really take your time with this exam; try to understand main concepts as they are present throughout the entirety of the exam and are interconnected. There are many ways to find solutions in MLC; you should therefore practice a lot in order to always find the shortest road to reach the solution (it is also true for exam FM).

Exam C on the other hand is not necessarily less complicated; it has 35 questions to be answered within 3 hours and 30 minutes. You should remain focused the entire time (it will also introduce you to FSA/CERA exams which are longer).

Some Exam P concepts are present in exam C; you will even sometimes see identical exercises in both exams. It is very useful to always have some distributions (WEIBULL, Exponential, Gamma, Beta…) in your memory. Being able to recognize them in any form is a huge shortcut.

What can really help you while writing actuarial exams is to think like an actuary (even if you are not one yet). I think it is another goal of the SOA/CAS: an actuary doesn’t think like other business professionals.

A typical example is the following: Imagine you will receive $1000 in 2014.  An Accountant may ask you in which quarter, a Financial Analyst will ask you when in the year (day and month) as you can borrow the present value of this amount at a certain interest rate and repay when you will receive the money.

However, an actuary will ask you the day, the month and the probability. Probability is the bottom line of all actuarial exams, as actuaries deal with uncertainty/risk. Sometimes it helps because some actuarial exam problems are unclear; you do not recognize their forms in any of your learning and then you have to think differently, think like an actuary thinks.

Another thing which is important is of course Coaching Actuaries. Adapt will give you a hard and intensive training, sometimes you will find it too difficult or too extreme but as it is written in ASM P by Mister OSTAZIEWSKI: “practice hard, pass easier”.