The aim of the Actuarial Mathematics subject is to provide a grounding in the principles of modelling as applied to actuarial work – focusing particularly on deterministic models which can be used to model and value known cashflows as well as those which are dependent on death, survival or other uncertain risks.
1. Data and basics of modelling (10%)
2. Theory of interest rates (20%)
3. Equation of value and its applications (15%)
4. Single decrement models (10%)
5. Multiple decrement and multiple life models (10%)
6. Pricing and reserving (35%)
The weightings are indicative of the approximate balance of the assessment of this subject between the main syllabus topics, averaged over a number of examination sessions.
The weightings also have a correspondence with the amount of learning material underlying each syllabus topic. However, this will also reflect aspects such as:
the relative complexity of each topic, and hence the amount of explanation and support required for it
the need to provide thorough foundation understanding on which to build the other objectives
the extent of prior knowledge which is expected
the degree to which each topic area is more knowledge or application based.
We suggest that you work through each of the chapters in turn. To get the maximum benefit from each chapter you should proceed in the following order:
1. Read the Syllabus Objectives. These are set out in the box at the start of each chapter.
2. Read the Chapter Summary at the end of each chapter. This will give you a useful overview of the material that you are about to study and help you to appreciate the context of the ideas that you meet.
3. Study the Course Notes in detail, annotating them and possibly making your own notes. Try the self-assessment questions as you come to them. As you study, pay particular attention to the listing of the Syllabus Objectives and to the Core Reading.
4. Read the Chapter Summary again carefully. If there are any ideas that you can’t remember covering in the Course Notes, read the relevant section of the notes again to refresh your memory.
5. Attempt (at least some of) the Practice Questions that appear at the end of the chapter.
6. Where relevant, work through the relevant Paper B Online Resources for the chapter(s). You will need to have a good understanding of the relevant section of the paper-based course before you attempt the corresponding section of PBOR.
Calculate the expected present value of a whole life assurance taken out by a life aged 50, where:
● the basic sum assured is £100,000
● the sum assured increases by 1.9231% at the start of each year excluding the first
● the benefits are payable at the end of the year of death.
Assume AM92 Ultimate mortality and 6% pa interest.
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