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Financial Mathematics Textbook

Interest Theory: Financial Mathematics and Deterministic Valuation

IT_2nd_ed_cover

This text 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 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 book 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.

This second edition of this textbook is a suggested textbook for the Exam FM Learning Objectives by the Society of Actuaries. The first edition is also a suggested textbook. Both editions can be used to prepare for the FM exam.


The second edition incorporates the topics covered by the SOA’s three study notes, including the following: interest rate determinants, defaults, inflation, T-bills, corporate bonds, first-order Macaulay approximations, and the U.S. banking system.


The first edition of this textbook, in combination with the three SOA study notes, can still be used to prepare for the FM exam.

How to Order the Textbook

The second edition can be ordered from the Actuarial Bookstore or Actex as a printed textbook, digital edition, or a combination of both.

Full Solutions to the Textbook Questions

The solutions to the second edition can be found below.

Errata

The errata to the second edition was last updated on 11.23.21.

Missing Pages

A few textbooks are missing pages. The missing pages can be downloaded using the following links.