Interest Theory: Financial Mathematics and Deterministic Valuation
This textbook, in combination with the three study notes, provides a comprehensive explanation of the required interest theory material on the Financial Mathematics (FM) Exam offered by the Society of Actuaries and the Casualty Actuarial Society. The concise explanations in this textbook fully prepare the students for the questions that appear on the FM Exam. Key Concepts are identified throughout the text for easy reference while working practice problems.
This textbook contains over 300 end-of-chapter questions that are written in the style of the multiple choice questions on the FM Exam. Each question has a difficulty rating that can be found at the end of the textbook along with the answer to the question. Fully worked solutions are available as a free download below.
The solutions contain step-by-step instructions that demonstrate the quickest and most effective use of the BA-II Plus calculator.
The solutions to this text can be found below:
The above solutions were updated on 12.14.16.
The errata to this text were updated on 10.12.17.
FM Practice Exams
Set of 3 FM Practice Exams Summary
The key to passing an actuarial exam is to practice working exam-style questions. Certainly, SOA Course FM is not an exception to this rule. The ActuarialBrew Set of Three FM Practice Exams helps you to focus on the material that is likely to be tested. By taking a practice exam under exam conditions, students can determine their strengths and weaknesses, which allows them to focus on the areas where improvement is most needed before the exam day arrives.
Each of our three FM Practice Exams has 35 exam-style questions and is designed to mimic the actual exam experience. The ActuarialBrew Set of 3 Practice FM Exams gives students the exam-taking practice necessary to build confidence for success on exam day.
The Practice Exams are formatted like the actual FM exam and the Practice Exams should be taken under exam conditions to help students best prepare for the actual FM exam.
How to Order the Practice Exams
The 2017 edition of our Set of 3 FM Practice Exams is for the June 2017 exam cycle and later cycles. It can be ordered as printed exam booklets or as an electronic product.
The 2015 edition of our Set of 3 FM Practice Exams is the current edition until the June 2017 exam cycle. Please note that this edition is appropriate for the April 2017 FM Exam.
Solutions to Practice Exams
Solutions to the FM Practice Exams: 2017 edition
Solutions to the FM Practice Exams: 2015 edition
Solutions to FM Practice Exams: 2014 edition
Solutions to FM Practice Exams: 2013 second edition
Free email support for these Practice Exams is provided to students who purchase our Set of 3 FM Practice Exams. We are committed to provide quick responses to the questions we receive because we are dedicated to help our customers pass the exam.
SOA FM Website
For an overview of the SOA's FM website, click here.
Helpful FM Links
For more information about the FM Exam, click here.
TI BA-35 Calculator Functions
TI BA II Plus Calculator Functions
Past Exams and Solutions
Other FM Links
June 2017 Changes to the FM Exam
Significant changes to the FM syllabus are coming in June 2017. More information can be found here.
An overview of the ASA and CERA curriculum changes can be found here.
History of Recent Changes to the FM Exam
For the June 2017 Learning Objectives, click here.
For the April 2017 Learning Objectives, click here.
For the February 2017 Learning Objectives, click here.
For the December 2016 Learning Objectives, click here.
For the October 2016 Learning Objectives, click here.
For the August 2016 Learning Objectives, click here.
For the June 2016 Learning Objectives, click here.
For the April 2016 Learning Objectives, click here.
For the February 2016 Learning Objectives, click here.
For the December 2015 Learning Objective, click here.
For the October 2015 Learning Objectives, click here.
For the August 2015 Learning Objectives, click here.
For the June 2015 Learning Objectives, click here.
For the April 2015 Learning Objectives, click here.
For the February 2015 Learning Objectives, click here.
For the December 2014 exam cycle, the topics of convertible bonds and mandatorily convertible bonds have been removed from the syllabus. Also, sections cited in several interest theory textbooks have been revised for clarity and to more closely match the learning objectives.
The 2014 edition of our FM Practice Exams are consistent with the December 2014 Learning Objectives.
For the December 2014 Learning Objectives, click here.
For the October 2014 Learning Objectives, click here.
For the August 2014 Learning Objectives, click here.
For the June 2014 Learning Objectives, click here.
For the April 2014 Learning Objectives, click here.
The April - October 2014 Learning Objectives are the same as the February 2014 Learning Objectives.
The February 2014 exam cycle will not be jointly administered between the SOA and the CAS. Consequently, the joint administration language has been dropped from the description of the FM exam. However, the CAS will still provide credit for CAS exam 2 for students who pass SOA exam FM.
For the February 2014 Learning Objectives, click here.
The December 2013 Learning Objectives were modified slightly from the October 2013 Learning Objectives:
- Ask Price, bid price, bid-ask spread and lease rate were added back
- Synthetic forwards and implied repo rate were added back
However, the required reading suggestions did not change.
The SOA updated the Exam FM/2 Learning Objectives for the October 2013 exam window.
Below is an overview of the changes to the October 2013 exam cycle:
- Current value definition has been added
- Solving time value of money equations with variable force of interest has been added
- Calculations involving loan refinancing has been added
- Effective duration and investment year allocation method have been deleted
- Ask price, bid price, and bid-ask spread have been deleted
- Definition of option writer has been added
- Implied repo rate has been deleted
- Synthetic forwards and paylater strategy have been deleted
- Option spread and vertical spread definitions have been added