everyone knows that if someone is studying medical then this guy will become a doctor, a pharmacist, or watsoeva.. if a person study law, then he will be a lawyer in the future..
the question is wat kind of job that can do if the one who studying actuarial science? everyone wondering about this.. the most common job that this guy will work is to calculate insurance premium and he is more likely to work in an insurance company.. and some will work in the financial sector..
as a malaysian, actuarial science students usually will take SOA professional papers. There is other papers from different society, eg CAS, FIA and many more..
SOA papers consist of 5 preliminary papers which are P, FM, MLC, MFE, and C.
Each paper is very challenging. Personally, i passed the 1st two papers with the second attempt.
A briefly explanation will be discussed at the below..
P stands for Probability. As we know this paper will test you on probability. A strong background in Calculus is needed to pass this paper.. This paper is juz a start of the adventure to be an actuary
FM stands for Financial Mathematics.. This paper will test you on calculating present values, future values for a single payment or an annuity.. For example, today's 1000 is not equivalent to tomorrow's 1000, as there is some interest factor. we treat they are different in the paper.
MLC stands for Modelling of Life Contingencies.. This paper will introduce you to calculate premium; life insurance. But of course what we calculate here is totally different with an insurance company does; but the concept is the same. Have you ever thought of why we pay so little premiums and we can be covered with a big amount.. For example, I pay 10 and i get paid 1000 when i die.. where does the money come from? The money comes from others that one have not died.. so that it is essential that many ppl paying for their own insurance.. if there is only one person who buys the insurance, then the insurance company will suffer a loss.. quite common sense..
MFE stands for Modelling of Financial Economics.. This paper will introduce you calls and puts.. What are they? They are options.. Call is an option to buy whereas put is an option to sell..
Imagine that you and me were into a contract.. current price of something is 10 and i buy a call from you with a strike price of 11 one year from now.. One year later, if the price of the thing is increased to 15, and i will exercise my option that i have bought from u one year ago. i will onie pay u 11 since this is the strike price.. and my payoff will be 15-11=4.. I will onie exercise the option when the price is increased.. and wat if it decreased? the answer is i will not exercise the option.. Did you notice that the two possibilities at the end, i will get positive or zero payoff.. and i will never suffer a loss.. There is no free lunch in this world. Actually when i buy a call from you, and i will pay you a premium.. Actuary pricing the option so that no one will feel there is unfairness.. There is many way to calculate the pricing, juz depends which method is used.. There is binomial, Blacksholes and many many more..
C stands for Construction and Evaluation of Actuarial Models, why not CEAM? I dunno either.. haha.. I just know a little about this paper.. i juz know this is to calculate nonlife insurance..
These five papers will take someone 1 to 5 years to pass all of them.. And i spent 1 year to pass P and FM. I hope that i can finish studying for MLC and MFE and take the papers that are available on this 2010 May..
There is some post for Actuary; which are ASA(associate), CERA and FSA(fellow).. After done the preliminary papers, here there are the advanced papers.. which i know nothing about them..
It is very tiring to be an actuary or an actuarial student. But everyone is working on it. So i hope i can work harder. It is important to practice many questions. Because i believe the sentence; BTDT which means Been There Done That.. think is the last resource in the exam.