Written by Baron Cao:
This is a question I asked myself when I was at the P/1-FM/2 crossroad. It’s not like a LeBron James decision where you can only choose one and regret it afterwards. Actuarial students have to pass both exams anyway. However, if you are curious, here are my comments.
A couple of comparisons you should consider:
1: FM (Financial Mathematics) only needs the first semester of Calculus as a prerequisite. Second semester’s calculus is used in the textbook as some formulas are derived from the Taylor Series. But it is completely optional since solving problems do not require it. (I only saw one out of hundreds of problems I have seen that needed Taylor Series.)
P (Probability) requires three semesters of Calculus. Understanding how to take double integrals using graphs alone can help you to solve more than ¼ of the problems in a test.
2. FM is more visual compared to P. The questions will have a lot of odds and ends. Thus, so be careful when putting everything on a time diagram to get a clear picture of what we know and what we want to know.
P, on the other hand, is more conceptual than FM. It is algebra. If you enjoy the experience of taking Calculus, especially the derivatives and the integration parts over handling a lot of separate pieces of information, P will be no doubt your favorite.
3. FM is more about finance. Interest rates, dollars, loans, stock problems, etc. are the majority. It is the only requirement for MFE materials. MLC also needs the first part of FM.
P is more statistical probability and mathematics. You not only need to deal with a lot of probability of course, but also get exposed to a lot of the math models that you will need in future exams. Exam C is purely based on P, and MLC will need the P material as well.
So which one will you take first? If you haven’t learned double integrals, you have no choice (smile) but FM. If you have, start with P before you forget how to solve double integrals. You are welcome to take both exams at the same time, though I believe switching between FM brain and P brain is a bit challenging for me. Thus, I highly recommend choosing one exam to master first.
If you have any problems, please feel free to leave a message below.