Exam Redesign...AGAIN?!

[Wannabe Actuary]

Is the exam system really going to go through another change? I mean we haven't even finished the transition to through the changes that were announced a few sittings ago.

http://www.soa.org/ccm/cms-service/stream/asset?asset_id=12596071&g11n

[urysohn]

This sounds more like a tweak than a redesign.

[Wannabe Actuary]

This sounds more like a tweak than a redesign.
It sounds to me like an addition of material to FM/2, addition to M, movement of some from M to C/4, etc...
Some people were just exposed to changes of the material for these exams, and now the material is changing again.

Perhaps redesign was a little too strong of a description. But I think it stinks that the same exams are changing again.

[bikram]

Also the proposed changes (addition of financial economics in one of the lower-level exams) aren't likely to take effect till early 2007. Plenty of time to adjust.

[Wannabe Actuary]

Also the proposed changes (addition of financial economics in one of the lower-level exams) aren't likely to take effect till early 2007. Plenty of time to adjust.
yeah, right after the changes in progress are just about done.

[Apollywog]

Also the proposed changes (addition of financial economics in one of the lower-level exams) aren't likely to take effect till early 2007. Plenty of time to adjust.
and I thought they weren't doing it till 2008.

[urysohn]

yeah, right after the changes in progress are just about done.
if you're being impacted by the changes to the fellowship courses, it's a good bet changes to FM and M won't hit you too hard.

[Wannabe Actuary]

if you're being impacted by the changes to the fellowship courses, it's a good bet changes to FM and M won't hit you too hard.
I'm sitting for M now. So likely these new changes won't hit me again, although, I guess there is still a slim chance that C could hit me if I get hung up on M and/or C.

The point remains the same. Schools have adjusted their programs to work around the new syllabus and VEE, etc... and now they have to rework their program again, just a few years later.

[IMP]

i got screwed every change. mid 90s, 2000, current one...i am done with it. no more i tell you!!!

[Mary Hardy]

I am happy to stand up and say this change is something I pushed hard for. When the new proposals came out and it became clear that there was no place in the curriculum for serious study of modern finance -- no arbitrage, Black-Scholes etc -- I thought this was such a serious error that I campaigned long and hard to have it put back in. Lack of understanding of the nature of non-diversifiable risk has been a factor in many major actuarial failures -- Equitable Life UK, for example, and other serious problems with variable annuities and pensions. The International Actuarial Association lists it as an essential part of an actuarial education. CAS has an exam. 'Fair value' is generating an important debate that is meaningless without the context of modern finance. I see no future for the profession if we do not embrace the technology (now 30 years old) of non-diversifiable financial risk management. Without it we are the laughing stock of the financial services industry.

We got it wrong with the exam changes in taking this out. When we realised we got it wrong, we could have left it and hope no one noticed, or we could do what it takes to put it right. I am sorry for the disruption, but not at all sorry that Black Scholes is going back into the general curriculum. I am still pretty cross that it was taken out in the first place.

[DW Simpson]

Schools have adjusted their programs to work around the new syllabus and VEE, etc... and now they have to rework their program again, just a few years later.

The world changes, business changes, and the exams have always changed to meet these demands. This isn't new. Adapt.

[Mary Hardy]

The point remains the same. Schools have adjusted their programs to work around the new syllabus and VEE, etc... and now they have to rework their program again, just a few years later.

Many schools recognise the importance of this material and teach it anyway. Our math finance course goes way beyond what is proposed for FM, M and C.

[Wannabe Actuary]

Many schools recognise the importance of this material and teach it anyway. Our math finance course goes way beyond what is proposed for FM, M and C.
True, and I know that B-S was covered in my financial mathematics course.

And to Claude, I understand the world changes and we need to adapt. It just seems like a major ovresight to have taken something this important off to begin with. Being someone who sat for Course FM last sitting, I can say the exam was a very rudimentary exam. Force of interest wasn't even tested. I could see removing the Econ, but I feel that the Finance had it's place on that exam.

[Gal Friday]

We got it wrong with the exam changes in taking this out. When we realised we got it wrong, we could have left it and hope no one noticed, or we could do what it takes to put it right. I am sorry for the disruption, but not at all sorry that Black Scholes is going back into the general curriculum. I am still pretty cross that it was taken out in the first place.

As one who struggled with Course 6, I'm pretty cross it was temporarily taken out too, cuz there's a whole slew of candidates who are now gonna make it through the exam system without having to study it at all.

[bikram]

CAS candidates probably wouldn't be impacted. they cover B-S quite thoroughly. And, i doubt there could be a SOA fellow who has made it through the exams (and therefore was never required to read up on B-S) and who doesn't even have a passing familiarity with B-S.

[DW Simpson]

CAS candidates probably wouldn't be impacted. they cover B-S quite thoroughly.

Yup, I remember that B-S.

[ACCtuary]

I don't want to see the word Vasicek on any SOA document ever again. If you are the real Vasicek reading this, no offense intended.

[Samir]

As one who struggled with Course 6, I'm pretty cross it was temporarily taken out too, cuz there's a whole slew of candidates who are now gonna make it through the exam system without having to study it at all.

Won't it be covered in one of the modules(Financial economics, that is)?

[Gal Friday]

Won't it be covered in one of the modules(Financial economics, that is)?

Why would you think that? I mean, it might be, but 1) Mary specifically said it was TAKEN OFF the syllabus with the 2005+ changes (not just moved to the modules) and 2) we don't know much of anything about what's going to be on the modules, but why would they need this "fix" to put it back in the syllabus if it was covered in the modules?

[Samir]

Why would you think that?

I figured, the modules would replace the materials from courses 5 and 6 and so it would be a good place to include FE. See, I got my ASA a while back, old system. Quit exams for a while and now would like to get my FSA. I will start with the modules next year. Where else would I learn FE? I won't be taking FM/M/C. I'm not in investments. So the modules, then!

[rawl316]

As one who struggled with Course 6, I'm pretty cross it was temporarily taken out too, cuz there's a whole slew of candidates who are now gonna make it through the exam system without having to study it at all.

I don't understand why people think like that. Why can't you be happy for others when they pass regardless of what was on their exam? I'm happy for people that are able to get through the watered down version of course 2.

[bikram]

I don't understand why people think like that.
Why, what's wrong with her thinking?
She is just stating the fact that all these no-good newbie exam takers who did not read up on B-S as part of the exam process are obviously less well trained than her, exam wise. And that all these 'fake' FSAs who do not know anything about B-S (becuase that was not on their syllabus) would still make real big $$$ (dollars) in the real world.

Life is unfair, is probably what Gal friday is trying to say.

[rawl316]

Why, what's wrong with her thinking?
She is just stating the fact that all these no-good newbie exam takers who did not read up on B-S as part of the exam process are obviously less well trained than her, exam wise. And that all these 'fake' FSAs who do not know anything about B-S (becuase that was not on their syllabus) would still make real big $$$ (dollars) in the real world.

Life is unfair, is probably what Gal friday is trying to say.

She is wishing more difficulty into other people's lives.

[JMO]

I know there has been a lot of exam discussions in this vicinity, but isn't it time to put the exam threads back in the section for discussing exams?

[DBlock]

I think that the SOA should do a better job at foreseeing the need of the industry and not jumping around with the syllabus. I am sure many of you hated the biostatistics part of Course 4. But I do agree with Mary that stochastic calc and B-S are an important part of modern finance. As actuary, we must fully understand the investment components of products like VUL etc.

[twig93]

I figured, the modules would replace the materials from courses 5 and 6 and so it would be a good place to include FE. See, I got my ASA a while back, old system. Quit exams for a while and now would like to get my FSA. I will start with the modules next year. Where else would I learn FE? I won't be taking FM/M/C. I'm not in investments. So the modules, then!

The new FAP course is replacing Course 5 and Course 7. The fellowship modules are replacing Course 6. So maybe there will be some FE on those modules??? I don't know how well it's even been determined what will be on the fellowship modules - given that they won't be coming out until 2007.

Perhaps for the folks that got through the preliminary exams without the FE, there should be an additional fellowship module covering FE (assuming that Mary is correct in that FE was 'removed' from the syllabus). That might not be too ridiculous. Then if you pass Exam M after the FE was added or the old Course 6, you don't need the FE fellowship module. But if you get through with the current (non-FE) Exam M or Course 3, and no Course 6, then you have to do the FE module.

On a personal level, that would suck, because I just passed Exam M without the FE, so I am basically proposing another hurdle for myself to jump over on my route to FSA. But if it's going to prevent people from telling me that I'm a "fake FSA", then it might be worth it. I certainly wouldn't want my job prospects to suffer because others perceive that I have no understanding of FE.

I did pass Course 2 when B-S was on there, although it was only one question, and I missed the question. From what I understand, it's covered in quite a bit more depth on Course 6, but I wouldn't know because I'm still trying to pass 4/C.

[asymp_normal]

I was under the impression that the original purpose of the redesign was to reduce travel time. What am I missing?

Exam 1 (P) CBT, 1 hour shorter. (That's a plus)

Exam FM, 3, and 4: Total of 1/2 hour shorter overall, an already difficult exam 3 made even longer and harder, and the added requirement of 4 college courses or equivalent.

It doesn't seem shorter or more appealling to me. Nature, and apparently the SOA, abhors a vacuum, and few items get removed and stay removed.

As an aside, the new beefier exam 3 is going to be a major discouragement to new entrants. It looks like a lot of exam 6 and some 8V has been moved onto exam 3. Its important material, but I'm afraid it'll make exam 3 a 5 hour brick wall for actuarial students. I'd be interested in hearing from academics regarding the typical undergraduate's level of preparation for this challenge.

[twig93]

As an aside, the new beefier exam 3 is going to be a major discouragement to new entrants... Its important material, but I'm afraid it'll make exam 3 a 5 hour brick wall for actuarial students.

Yup, I agree.

[twig93]

I was under the impression that the original purpose of the redesign was to reduce travel time. What am I missing?

If I am understanding Bruce and others on the board correctly, the board is interested in reducing travel time, but that was not the purpose behind redesigning the exams. The exams were redesigned because the 2000-system was regarded as a failure, particularly some of the aspects of the upper-level exams such as PD, and the removal of nation-specific content. There's probably lots of other things wrong with the current system, but I don't remember them all.

[Dr T Non-Fan]

I don't think the SOA can control travel time. Travel time is controlled more by those candidates who simply refuse to quit after many failures and eventually become Fellows.

[Peter Lemonjello]

I am happy to stand up and say this change is something I pushed hard for. When the new proposals came out and it became clear that there was no place in the curriculum for serious study of modern finance -- no arbitrage, Black-Scholes etc -- I thought this was such a serious error that I campaigned long and hard to have it put back in.

I think I remember a post by you saying as much. I don't recall any leadership chiming in at the point and saying, "yeah, we messed up, we'll fix it real quick". I think lead time for changes, and being constantly jerked around is what aggrevates students.

Get this from the preface to the second (2004) edition of "Loss Models"


"Shortly after publication, the Casualty Actuarial Society and the Society of Actuaries altered their examination syllabus to include our first edition. The good news was that the first edition was selected as source material for the new third and fourth examinations. The bad news was that the subject matter was split between the examinations in a manner that was not compatible with the organization of the text. By itself, that is sufficient reason to produce a revision."


Shall we expect a third edition soon?

**
But, substantively, on the need for financial economics, I'm sure you are right.

Let me ask you this -- Does CAS exam 8 cover all the topics that are being added to FM, C and M? I ask this not to complain about the curriculum distribution (though if 8 includes it, it seems silly to have it spread among other exams, and maybe CAS will "split" from SOA earlier due to this), but I ask it to decide which exam to take next go around.

I think I have a better chance of passing the current (4 hour) exams, rather than being a guine pig for the new material and enduing a grueling 5 hour exam. On the other hand, I would like to learn the financial economics material.

Assuming I plan on taking CAS exam 8, of the financial economics topics, what will I be missing to be a complete actuary?

[ACCtuary]

I had a look at the financial economics topics proposed and I am troubled. It sounds to me like more memorization of some people's favorite pet models. Then on the test, only the most basic features of it can be tested because the model is too complex. So, exam takers wind up with neither a thorough understanding of the model nor the ability to apply it in real-world situations.

Financial Economics should be delayed until it can be validated by educational experience. Yield curve models require specialization and should be taught as part of continuing ed after the ASA designation is reached.

[Mary Hardy]

I had a look at the financial economics topics proposed and I am troubled. It sounds to me like more memorization of some people's favorite pet models. Then on the test, only the most basic features of it can be tested because the model is too complex. So, exam takers wind up with neither a thorough understanding of the model nor the ability to apply it in real-world situations.

Financial Economics should be delayed until it can be validated by educational experience. Yield curve models require specialization and should be taught as part of continuing ed after the ASA designation is reached.

Umm, -- is Black-Scholes a 'pet model'? Everything we are suggesting adding is mainstream math finance. The textbook that it comes from is highly regarded. I proposed choosing the textbook first, and the learning objectives second, so that the mapping is clear. We reviewed several texts, this was the one we liked best.

Incidentally, we teach this material, with more rigour, in a 4th year undergraduate class. The students' view is that this material is a little more straightforward than loss models.

[Harbinger]

As an aside, the new beefier exam 3 is going to be a major discouragement to new entrants. It looks like a lot of exam 6 and some 8V has been moved onto exam 3. Its important material, but I'm afraid it'll make exam 3 a 5 hour brick wall for actuarial students. I'd be interested in hearing from academics regarding the typical undergraduate's level of preparation for this challenge.
The material they are proposing to add to exam M for FE does not appear to be overly difficult. Binomial tree pricing to price a stock, call or put. The basics of B-S. Come on, these were the easier topics of the old course 2, back when it had econ and CF on it. I agree that a 5 hour exam is brutal, but not daunting.

[saahu5]

How will this change affect the Finance VEE? It seems like a lot of the topics that will be added to FM and M would be included in approved VEE courses.

[Mary Hardy]

How will this change affect the Finance VEE? It seems like a lot of the topics that will be added to FM and M would be included in approved VEE courses.

The corporate finance VEE is supposed to include Black Scholes, but as a small topic which is covered very superficially in the standard text books (eg Brealey & Myers). Many VEE-CF courses barely touch on it.

Financial economics has essentially bifurcated into two streams, the corporate side and the math finance (or risk management) side. VEE covers the corporate side, M (if the proposal is approved, big if) will cover the math finance side, crucial for risk management of financial contracts.

[Examinator]

I'm glad to be past this joint musical-syllabi crap.

[funk1]

I read the document and see they are getting rid of interpolation and smoothing. That topic sure lasted.

[Peter Lemonjello]

What is the time frame for finalization of this proposal?

On the CAS side -- Will CAS decide what they will do at their Annual meeting in about two weeks? I am particularly interesting in:

1. Will CAS continue to accept SOA "M" (or whatever it will be called, lets call it M-Prime (M')) for credit for CAS 3?

2. Will exam 4 subsume the loss models material from the current Exam 3/M?

[Stuart Klugman]

Some points that may add clarity:
1. The CAS has been part of this discussion. It is on the agenda for their Board meeting in a few days. Going in there has been solid agreement on the effects of this proposal. We will just have to see if either Board decides to make substantive changes.
2. Very few comments were sent to the e-mail address set up for this issue. The SOA Board sees those comments. They don't all read this forum.
3. I think Mary was a little strong in stating that the redesign completely removed this material. It was definitely reduced and mostly relegated (other than those Fellowship tracks with a finance tilt) to the FAP and FSA modules. Her argument (and it was and is a good one) is that this material easily clears the hurdle as being a subject that should be rigorously tested. In addition, it is as fundamental to actuarial practice as life contingencies and so needs to be covered early in the education process.
4. The preface to the second edition of Loss Models was quoted. The recommendation to put the material all on Exam C makes the book even more appropriate. However, if there is an outcry for a third edition I am sure our publisher would appreciate the revenue:)

[rebeccap]

I am new to this particular forum so please bear with me if the intelligence level of my question does not match PAR here.

From what I read it seems like everything is still up in the air. For a CAS candidate like me, if I pass all the current preliminary exams (P, FM, M or 3, and C) + VEE courses before May 07, will I be impacted should this redesign be in effect?--meaning will I be required to go back and take VEE-like exam/course in Financial Economics?

Thanks for your response in advance.

Rebecca

[Stuart Klugman]

From what I read it seems like everything is still up in the air. For a CAS candidate like me, if I pass all the current preliminary exams (P, FM, M or 3, and C) + VEE courses before May 07, will I be impacted should this redesign be in effect?--meaning will I be required to go back and take VEE-like exam/course in Financial Economics? Rebecca
The proposal is credit for credit. If you pass M without financial economics, you still have M. That is why it is may be possible to earn a designation without being tested on this. However, remember that the proposal is for the SOA M, not the CAS 3. More relevant at this point for CAS exam takers is the moving of some material from 3 to 4 (M to C). If you end 2006 with 3 but not 4, you will be tested twice on some material. Also, the new 4 will have a little bit of financial economics relating to the lognormal distribution and simulation. Our goal is to make that material self-contained, but a bit of background reading will probably help.

As a CAS exam taker, as their current system is now, you will get tested on financial economics on exam 8. So there is no "going back" for you.

[rebeccap]

The proposal is credit for credit. If you pass M without financial economics, you still have M. That is why it is may be possible to earn a designation without being tested on this. However, remember that the proposal is for the SOA M, not the CAS 3. More relevant at this point for CAS exam takers is the moving of some material from 3 to 4 (M to C). If you end 2006 with 3 but not 4, you will be tested twice on some material. Also, the new 4 will have a little bit of financial economics relating to the lognormal distribution and simulation. Our goal is to make that material self-contained, but a bit of background reading will probably help.

As a CAS exam taker, as their current system is now, you will get tested on financial economics on exam 8. So there is no "going back" for you.

Wonderful; thank you for the clarification Dr. Klugman!

[Bison]

Hi, I'm new to the forum, so if this was answered somewhere else, I apologize.

My question is what the thought process is adding more material to Course M while there's a shorter and seemingly easier exam in FM that could probably "more afford" to take on some extra topics.

[TRINIDON2K]

I won't be taking C or M until May/Nov 2006, but I sure hope I can get through it all before any major changes. I hate it when the syllabus changes and there are no sample questions for new material.

[Frenchie]

I won't be taking C or M until May/Nov 2006, but I sure hope I can get through it all before any major changes. I hate it when the syllabus changes and there are no sample questions for new material.

If I'm correct in what I've read and know about exams, a lot, if not all, of this material has been tested in one way or another. I mean, it may not have been on 3/M in the past, but it has been on an exam. Therefore, any material that has been on exams in the past will have sample questions.

[silverfox]

Hi, I'm new to the forum, so if this was answered somewhere else, I apologize.

My question is what the thought process is adding more material to Course M while there's a shorter and seemingly easier exam in FM that could probably "more afford" to take on some extra topics.

I think it's because they just took the corporate finance and economics part off of FM and turned it into VEE and someone would feel a little dumb if they put it right back on.

[funk1]

They took corporate finance and general economics off of 2 and made it VEE. This is not what they are adding back on. It is more like current Course 6 material.

[twig93]

If I'm correct in what I've read and know about exams, a lot, if not all, of this material has been tested in one way or another. I mean, it may not have been on 3/M in the past, but it has been on an exam. Therefore, any material that has been on exams in the past will have sample questions.

There may be sample questions, but neither 1 pt. multiple choice questions nor essay questions from Course 6 are going to be representative of what you can expect to see on the preliminary exams. They'll give you some insight as to what the Course 6 committee feels is important, which will hopefully bear some resemblance to what the Exams FM, M, and C committees will think is important. But they won't be exam-like questions.

[bdschobel]

If I am understanding Bruce and others on the board correctly, the board is interested in reducing travel time, but that was not the purpose behind redesigning the exams. The exams were redesigned because the 2000-system was regarded as a failure, particularly some of the aspects of the upper-level exams such as PD, and the removal of nation-specific content. There's probably lots of other things wrong with the current system, but I don't remember them all.
Some people are confusing transitions here. One purpose of the 2000 restructuring was to reduce travel time by forcing candidates to go through the syllabus in larger chunks. So far, so good, but then the leadership at the time (I wasn't there then!) decided to remove all nation- and practice-specific content as not being necessary to an actuarial education. That fatal error resulted in the 2005 restructuring, which retained the travel-time reducing elements of the 2000 one and went just a bit farther (although the true impact is uncertain right now, due to some new things like FAP).

Whenever changes to the exams are considered, the Board discusses the likely effect on travel time. Most of would like to bring down the average age at FSA from the recent high of 33 to something more like 28 or 29. Among other things, that would help to attract bright young people to the actuarial profession. An average age at FSA of 33 just has to be very discouraging.

Bruce

[funk1]

A friend of mine has 1.5 years left on his medical residency. He will be an operating physician at 29. Me? I'll be working on ASA MODULES. Should actuaries be a slower travel time than doctors/surgeons? I think not.

[sharkie21]

IMHO, I don't think that's a fair comparison. If you put the same amount of time into schooling/studying for exams as an individual who is studying medicine you should be able to get through your exams fairly quickly and become an FSA around 25. However, I feel this is frowned upon because it's hard to get a job with an FSA title, but very little experience. Correct me if I'm wrong, but this is how I feel.

[bdschobel]

That's not quite how it normally works. Few 25-year-old FSAs are out pounding the pavement looking for jobs. Most people who go through the exams quickly are already employed by insurance companies in actuarial-student programs. Their employers have to find appropriate jobs for them. It's not really that difficult, and the companies normally want to retain these people.

Bruce

[Peter Lemonjello]

What is the time frame for finalization of this proposal?

On the CAS side -- Will CAS decide what they will do at their Annual meeting in about two weeks? I am particularly interesting in:

1. Will CAS continue to accept SOA "M" (or whatever it will be called, lets call it M-Prime (M')) for credit for CAS 3?

2. Will exam 4 subsume the loss models material from the current Exam 3/M?

Has anything happened?
Has the SOA accepted the proposal?
Has CAS respondended in any way?

Anybody?

[SirVLCIV]

Whenever changes to the exams are considered, the Board discusses the likely effect on travel time. Most of would like to bring down the average age at FSA from the recent high of 33 to something more like 28 or 29. Among other things, that would help to attract bright young people to the actuarial profession. An average age at FSA of 33 just has to be very discouraging.

Bruce

As, hopefully, a 'bright young person' pursuing the career, the average doesn't mean much to me. It seems, to me, the biggest hurdle people have in preparing for the exams is juggling a full-time work week with taking exams (and passing them), but I think that's anything a society can help with.

[twig93]

Peter: I'm pretty sure that the changes to exams FM, M, and C are definite and that joint sponsorship of FM & C will continue. I don't see any reason why the CAS would stop accepting M. It's going to contain everything it currently does plus more material. It's even harder than it was before; it's not like the CAS is lowering their standards. And the fact that it's going to be harder, probably means that you will see more casualty students opting to take the CAS Exam 3 instead.

SirVLCIV: The society can help with students juggling the exams by tweaking things such as the following: (doubtless not a comprehensive list)

exam length - a 5 hour Exam M is going to be harder to pass than the current 4 hour version
timing of exams - an exam given in August when people are more likely to be on vacations or committed to attend or be in a wedding is going to be more difficult for students to fit into their schedule than an exam given in May
frequency of exams - if exams are offered more often, it's not so detrimental to travel time if you fail one
timing of release of exam results - less down time between exams spent waiting for results means more time available to study
method of evaluation - different people learn differently. Expanding the methods of evaluating student knowledge beyond multiple choice & written answer exams means that you encompass more styles of learning
establishing consistent expectations - exams that are approximately the same level of difficulty with equivalent passmarks are going to mean that students have a better idea of what to expect and what they need to do to get over the hurdle.None of that equates to changing standards, just ways that that the society can make things easier or conversely harder for students to get through the exams.

[SirVLCIV]

I honestly have to say I have no problems with the current exam setup, but I'll get back to you after I take M in November ;).

[The Drunken Actuary]

I am happy to stand up and say this change is something I pushed hard for.

We got it wrong with the exam changes in taking this out. When we realised we got it wrong, we could have left it and hope no one noticed, or we could do what it takes to put it right.

I am sorry for the disruption, but not at all sorry that Black Scholes is going back into the general curriculum. I am still pretty cross that it was taken out in the first place.What a joke. I didn't even know the exams were chaning again till I saw this thread today. If it was so important, it shows pretty severe incompetence in the people that did the last redesign. If it's not that important, it shows you have a pretty big hang-up for a minor thing and were able to force your personal agenda on everybody else. Either way it's another example of why the SOA is a disaster and I have 0 respect for the organization.

[The Drunken Actuary]

I had a look at the financial economics topics proposed and I am troubled. It sounds to me like more memorization of some people's favorite pet models. Then on the test, only the most basic features of it can be tested because the model is too complex. So, exam takers wind up with neither a thorough understanding of the model nor the ability to apply it in real-world situations.Mary Hardy and Gal Friday had to endure such memorization, and by golly if you want to be an FSA than you will too!

[Peter Lemonjello]

Peter: I'm pretty sure that the changes to exams FM, M, and C are definite and that joint sponsorship of FM & C will continue. I don't see any reason why the CAS would stop accepting M. It's going to contain everything it currently does plus more material. It's even harder than it was before; it's not like the CAS is lowering their standards. And the fact that it's going to be harder, probably means that you will see more casualty students opting to take the CAS Exam 3 instead.



Agreed, but what will be on the CAS 3 exam in 2007? Since Exam 4/C will now contain loss models material, there wouldn't be much sense in testing Loss Models material on exam 3 (would there?)

I'd sure like to hear from the CAS leadership on where things are going.

It looks to me like the CAS will be dragged along pretty much any direction the SOA chooses to go.

[twig93]

Agreed, but what will be on the CAS 3 exam in 2007? Since Exam 4/C will now contain loss models material, there wouldn't be much sense in testing Loss Models material on exam 3 (would there?)

I'd sure like to hear from the CAS leadership on where things are going.

It looks to me like the CAS will be dragged along pretty much any direction the SOA chooses to go.

I'm not quite sure I follow. Under the current structure both CAS 3 and Exam M test the beginning Loss Models material and the joint C/4 tests the advanced Loss Models material. I don't think there's any proposal to move the placement of any of the Loss Models material on any of the three applicable exams.

[Peter Lemonjello]

I'm not quite sure I follow. Under the current structure both CAS 3 and Exam M test the beginning Loss Models material and the joint C/4 tests the advanced Loss Models material. I don't think there's any proposal to move the placement of any of the Loss Models material on any of the three applicable exams.

Uh, you better read the PDF at the link that started this thread.

Under Exam M:
"... To accommodate the additional material, move loss models, including risk theory, to Exam C/4".

Under Exam C/4:
"...Add the loss models and risk theory material moved from Exam M."

That's why I think there is an open question: What is CAS going to do? Will CAS 3 change, and if so, how?

[twig93]

Uh, you better read the PDF at the link that started this thread.

Under Exam M:
"... To accommodate the additional material, move loss models, including risk theory, to Exam C/4".

Under Exam C/4:
"...Add the loss models and risk theory material moved from Exam M."

That's why I think there is an open question: What is CAS going to do? Will CAS 3 change, and if so, how?

OK sorry, I didn't know that. That is a good question! I was under the impression that they were leaving the Loss Models material where it was; but clearly I am mistaken!

[Bühlmann]

The joke between students and FSA's is always "so what's changing now?" These most recent changes are fairly drastic (VEE's, modules, computer-based exams). I understand that not everyone's perfect and that it takes time to fix problems, but that does not change the fact that it is extremely frustrating. And sometimes, the changes are out of control. A good example of change is the material on Exam 3/M. Just think back to the last three years of all the changes that have been made to the exam. It was "Course 3" for starters. Then Brownian motion, ruin theory, constant force/hyperbolic were taken off. A lot of simulation was taken off, expense-loading was added, and Markov chains were modified. Then it was decided that financial economics was to be added, the loss models stuff would be moved off, AND it would be a 5 hour exam. AND THEN, the decide that for the fall 06 exam, prior to the financial economic stuff is added in 07, they want to add back constant force, hyperbolic, more hattendorf, etc.
I think that is just crazy. Why all the changes? Why is the hyperbolic assumption put back-and-forth on this exam like a hot potato? In reality, most of that stuff is not important. Seriously, is the "Balducci" assumption that important in actuarial mathematics? I've been in this game a few years and I think most fellows would say "HUH?" if you asked them what hyperbolic interpolation was.
I'm all about changes and progress. But I think it gets to be too much sometimes and in the end, I really am not a better actuary as a result. I'll never use the hyperbolic assumption. I'll use the uniform assumption like 99.999999% of the real world.
</end rant>

[twig93]

The joke between students and FSA's is always "so what's changing now?" These most recent changes are fairly drastic (VEE's, modules, computer-based exams). I understand that not everyone's perfect and that it takes time to fix problems, but that does not change the fact that it is extremely frustrating. And sometimes, the changes are out of control. A good example of change is the material on Exam 3/M. Just think back to the last three years of all the changes that have been made to the exam. It was "Course 3" for starters. Then Brownian motion, ruin theory, constant force/hyperbolic were taken off. A lot of simulation was taken off, expense-loading was added, and Markov chains were modified. Then it was decided that financial economics was to be added, the loss models stuff would be moved off, AND it would be a 5 hour exam. AND THEN, the decide that for the fall 06 exam, prior to the financial economic stuff is added in 07, they want to add back constant force, hyperbolic, more hattendorf, etc.
I think that is just crazy. Why all the changes? Why is the hyperbolic assumption put back-and-forth on this exam like a hot potato? In reality, most of that stuff is not important. Seriously, is the "Balducci" assumption that important in actuarial mathematics? I've been in this game a few years and I think most fellows would say "HUH?" if you asked them what hyperbolic interpolation was.
I'm all about changes and progress. But I think it gets to be too much sometimes and in the end, I really am not a better actuary as a result. I'll never use the hyperbolic assumption. I'll use the uniform assumption like 99.999999% of the real world.
</end rant>

Wow, I really am out of the loop. I had no idea they were making those changes in 2006 - that's really odd. While I agree that 99.999999% of the time, UDD is perfectly adequate, I remember reading a study that showed that it is not accurate when modeling the human life cycle. Among older ages, people are much more likely to die in the months immediately following their birthday. Which is basically what the Balducci assumption does.

(The study went on to hypothesize about why this was true: people feeling a sense of accomplishment at having made it to that milestone and being more willing to die after their birthday, people living to see their kids who will actually visit them in the nursing home for their 90th birthday, but not able to justify living a whole extra year to see their kids at their 91st birthday - things like that.)

But at younger ages, deaths are more uniformly distributed, and even at the older ages, the differences in results are so minor that IMO they don't warrant using a more complex model.

So Balducci was on the syllabus in 2004, off in 2005, on in 2006. Any word on 2007???

I remember going to a Batten seminar for the Fall 2004 sitting of Course 3 and Batten advised us that there would likely be a Balducci problem since it would be the examiners' last chance to ask such a question. I disagreed, feeling that if it was so unimportant as to be removed from the syllabus, they wouldn't bother. I was right.

So now that they're putting it back on, I'd place high odds on there being a Balducci problem on this exam!

[Happy Conservative]

What was wrong with the exams to begin with?

[SirVLCIV]

They were hard.

[bdschobel]

Nonsense. The 2000 exam system was not hard. And it had been stripped of nearly all nation- and practice-specific content. Employers were very unhappy with the lack of knowledge of their new FSAs. Need I go on? Clearly, the 2000 exam system needed to be replaced, and we are doing that right now.

I can make an argument that the pre-2000 exam system was just fine, but that's ancient history at this point.

Bruce

[SirVLCIV]

I was joking.

[JMO]

The joke between students and FSA's is always "so what's changing now?" These most recent changes are fairly drastic (VEE's, modules, computer-based exams). I understand that not everyone's perfect and that it takes time to fix problems, but that does not change the fact that it is extremely frustrating. And sometimes, the changes are out of control. A good example of change is the material on Exam 3/M. Just think back to the last three years of all the changes that have been made to the exam. It was "Course 3" for starters. Then Brownian motion, ruin theory, constant force/hyperbolic were taken off. A lot of simulation was taken off, expense-loading was added, and Markov chains were modified. Then it was decided that financial economics was to be added, the loss models stuff would be moved off, AND it would be a 5 hour exam. AND THEN, the decide that for the fall 06 exam, prior to the financial economic stuff is added in 07, they want to add back constant force, hyperbolic, more hattendorf, etc.
I think that is just crazy. Why all the changes? Why is the hyperbolic assumption put back-and-forth on this exam like a hot potato? In reality, most of that stuff is not important. Seriously, is the "Balducci" assumption that important in actuarial mathematics? I've been in this game a few years and I think most fellows would say "HUH?" if you asked them what hyperbolic interpolation was.
I'm all about changes and progress. But I think it gets to be too much sometimes and in the end, I really am not a better actuary as a result. I'll never use the hyperbolic assumption. I'll use the uniform assumption like 99.999999% of the real world.
</end rant>

The Balducci assumption is important because it shows just how little the actuarial profession actually cares about statistical methods. :swear: What the answer ought to be is that the formula we use to estimate a mortality rate is not exactly correct, but is computationally convenient, and that the error is not that big unless qx is very large (a situation in which we don't have a lot of data anyway. . .)

I would certainly rather see Brownian motion and ruin theory covered, but that's just me.

Thanks, Bühlmann, for letting me share your soapbox.

[Bühlmann]

Not a problem JMO.

All great studies aside, when the hyperbolic assumption consistently makes its way to life insurance pricing models (i.e. when it makes enough of a difference in pricing and company officers don't think they are wierd for using big words like "hyperbolic"), then I'll concede. :lol:

[The Drunken Actuary]

Nonsense. The 2000 exam system was not hard.Any exam system where smart peope study for months and only 25%-35% pass is hard.

[Steve White]

Not a problem JMO.

All great studies aside, when the hyperbolic assumption consistently makes its way to life insurance pricing models (i.e. when it makes enough of a difference in pricing and company officers don't think they are wierd for using big words like "hyperbolic"), then I'll concede. :lol:
As I've said elsewhere, the Course M committee doesn't set our syllabus. We just set the exams. We didn't take hyperbolic off, nor did we put it back on.

It was never important as a pricing assumption. Historically, it was almost always used as the basis of mortality studies, and probably still is the basis of mortality studies in your companies, if you are large enough to do your own. Many lives will be in the study for full years, but others are not, due to lapses. Depending on the type of study, you may also have partial years on new issues. While it does not make much difference to the study, the studies usually include partial years as if hyperbolic (Balducci) applies.

Those conducting the studies might not recognize "hyperbolic" or "Balducci", but that's what they're doing.

[Bühlmann]

As I've said elsewhere, the Course M committee doesn't set our syllabus. We just set the exams. We didn't take hyperbolic off, nor did we put it back on.

Yes, I recall you saying that before (and so my rant was not towards the committee), and I think it is interesting because I would think the best people to consult on these things would be the exam committees that have their hands in this material. But I guess that is not how it goes. I wonder how it does go.

[teapeaexcueexplustea]

Sorry if this question has been asked already, but I didn't find it on my quick search.

Say I have the preliminary exams passed by the end of 2006. I therefore wouldn't need to take the extended FM, M or C to account for more Financial math being added. But also, exam 6 is removed, so is it correct to say that (other than doing it on my own) I wouldn't be learning the required Fin. Math (advanced) stuff? If I am correct, I would have thought that maybe the SOA would consider this as something that might occur, and this could cause a (somewhat) hole in some ASA's/FSA's knowledge.

I appreciate your comments.

[Ncrug]

Sorry if this question has been asked already, but I didn't find it on my quick search.

Say I have the preliminary exams passed by the end of 2006. I therefore wouldn't need to take the extended FM, M or C to account for more Financial math being added. But also, exam 6 is removed, so is it correct to say that (other than doing it on my own) I wouldn't be learning the required Fin. Math (advanced) stuff? If I am correct, I would have thought that maybe the SOA would consider this as something that might occur, and this could cause a (somewhat) hole in some ASA's/FSA's knowledge.

I appreciate your comments.
In the redesign Q&A ( http://www.soa.org/ccm/cms-service/stream/asset?asset_id=16575074&g11n.enc=UTF-8 ), they say that you are set if you passed FM before 2007. They just recommend that you review the Financial Economics.

[MNBridge]

Any exam system where smart peope study for months and only 25%-35% pass is hard.

Define 'smart people'. People that did well in school? People that want to be an actuary?

The #1 problem I see with exams is the syllabus (especially on higher level exams) is filled with papers the were not intended to be used as 'teaching' papers.

A huge portion of the exams is figuring out 'What is the same in each paper, and what is different? And why?'
This would be much easier if there was a paper (more like a book) with chapters on each type of reserving method.
- How they compare to the other types
- The advatages and disadvantages of each
-- All the formulas would be spelled out and quick to find.

This would cut down study time more than any other one thing you can propose. Problem it would take a TON of work and there is not a 'industry practice' guideline for how to do much of anything in the Actuarial world (at least on the P&C side).

Would people still fail? Yep. But I think those that do fail would probably fail over and over again. And those that are going to get through would do so rather quickly. (I think the 2000 changes will also have this effect, which IMO is good)

[teapeaexcueexplustea]

In the redesign Q&A ( http://www.soa.org/ccm/cms-service/stream/asset?asset_id=16575074&g11n.enc=UTF-8 ), they say that you are set if you passed FM before 2007. They just recommend that you review the Financial Economics.

Thanks

[twig93]

Sorry if this question has been asked already, but I didn't find it on my quick search.

Say I have the preliminary exams passed by the end of 2006. I therefore wouldn't need to take the extended FM, M or C to account for more Financial math being added. But also, exam 6 is removed, so is it correct to say that (other than doing it on my own) I wouldn't be learning the required Fin. Math (advanced) stuff? If I am correct, I would have thought that maybe the SOA would consider this as something that might occur, and this could cause a (somewhat) hole in some ASA's/FSA's knowledge.

I appreciate your comments.

They keep tweaking the system so that at any given point in time, everything that they think is important is on there somewhere. But they change their minds about what's important frequently and they change the system enough that it's quite likely you'll become an FSA with some gaps. Whether those gaps are minor (Balducci) or significant (Financial Economics) is purely a matter of chance.

[Peter Lemonjello]

TP, if you feel really badly about your Financial Economics gaps, while you couldn't retake Exam "M", you could take CAS Exam 8.

I bet you won't feel that badly about your gaps ...

[Bühlmann]

The exams are a weed out system. In the Exam C ASM manual, there is a problem from 1992 where they gave you the pdf of an exponential and asked you to find the maximum likelihood estimate of the pdf. Now an Exam C problem would assume that anyone who didn't know that was a total idiot. With the advent of quite a competitive study manual market, college actuarial programs all over the place, internet chatting aboiut exams, and more people wanting to become actuaries (for the chicks of course), exams are becoming more and more involved. I wonder what exams will be like in 25 years.

[wat?]

I wonder what exams will be like in 25 years.

Beginning of Exam.

#1.

Given the past 3 years' exams, predict the 40 questions that will appear on this year's exam, with correct solutions and 4 other possible answers.

No partial credit.

End of Exam.

[MNBridge]

The exams are a weed out system. In the Exam C ASM manual, there is a problem from 1992 where they gave you the pdf of an exponential and asked you to find the maximum likelihood estimate of the pdf. Now an Exam C problem would assume that anyone who didn't know that was a total idiot. With the advent of quite a competitive study manual market, college actuarial programs all over the place, internet chatting aboiut exams, and more people wanting to become actuaries (for the chicks of course), exams are becoming more and more involved. I wonder what exams will be like in 25 years.

Have you seen the calculators people were given to use in 1992? Have you seen the study guides?

- In 1992 the field wasn't as big and about the same percentage of people passed. (and you had to take 2 or 3 exams to equal one full exam today)
- I took exams 1 through 3 in 1989 and 1990. I took exam 4 in 2000. The exam in 2000 was no easier or harder than they were in 1990.
- It used to be preserverence could get you through exams (people could take 1/3 of a full exam at a time). Now that is not the set.
Effect: Travel time will be faster for those who do finish, but some people who could get through the exams by taking a long time and very small pieces each sitting will never get through the exams.

[MNBridge]

The exams are a weed out system.

While true they also serve another purpose. Most people who don't see that other purpose never finish (though some do).

[The Drunken Actuary]

Define 'smart people'. People that did well in school?Yes, mostly I was thinking of people who do well in medium-to-higher level college math classes. Or at least pass them and take more.

[teapeaexcueexplustea]

TP, if you feel really badly about your Financial Economics gaps, while you couldn't retake Exam "M", you could take CAS Exam 8.

I bet you won't feel that badly about your gaps ...

Thanks for the suggestion, but I think I will pass :)

[Gandalf]

TP, if you feel really badly about your Financial Economics gaps, while you couldn't retake Exam "M", you could take CAS Exam 8.

I bet you won't feel that badly about your gaps ...
Thanks for the suggestion, but I think I will pass :)
Don't get overconfident. CAS Exam 8 is pretty tough. :-P

[teapeaexcueexplustea]

Don't get overconfident. CAS Exam 8 is pretty tough. :-P

Funny Guy

[Bühlmann]

Have you seen the calculators people were given to use in 1992? Have you seen the study guides?

Yes, I have. And those are the reasons why the dynamics of exams have changed. Problems from 1992 (what is the MLE of an exponential) are way beyond basic in 2006. The underlying actuarial message ("another purpose" as you put it) is still the same though. They just test differently to accomodate the dynamic pool of candidates and the tools they have at their disposal (e.g better calculators and manuals).

[JMO]

When the student's knives get sharper, the exam makers serve up tougher meat. (I saw this somewhere in the early 70's.) The more things change . . .

[twig93]

When the student's knives get sharper, the exam makers serve up tougher meat. (I saw this somewhere in the early 70's.) The more things change . . .

Well said; I think that appears to be an accurate summary.

I don't think there's any question that the exam problems are getting more difficult. Partly for the reasons Buhlmann mentioned above, although I think he missed one: as the exam committees test the basic knowledge and wish to not re-use problems, they start to look for more and more new questions to ask about the material. This pushes them into the more obscure portions of the syllabus because they've already asked numerous questions on the mainstream stuff. I well remember some of the questions on the old Course 2 were unbelievably obscure.

Anyone remember a Pigou tax?
Anyone?
Anyone?

The problem was they'd already tested all the mainstream ideas so they were left with nothing but obscure stuff as the source of new types of questions. I hear from my colleagues that this kind of stuff is happening on the upper-level exams as well. (They still talk about the May 2003 Course 6 Extended Vasicek Trinomial question.)

[twig93]

So I guess the really pertinent question is: Is what the E&E committees are doing appropriate?

And I think the answer really depends on what you think the purpose of the exams is. If the purpose of the exams is criterion-based [I'm trying to type this with a straight face] then it clearly isn't. The purpose of a criterion-based exam is to make sure that you have a minimum standard of knowledge among passers. Well, if it's now easier to acquire that minimum standard of knowledge, be it from better calculators, better study guides, more communication with other exam-takers, better seminars/courses teaching the material - none of that should matter. If more people are acquiring the minimum standard of knowledge, however they're acquiring it, then more people should pass the exams!

If you think the purpose of exams is to limit the number of 'qualified' actuaries, then what the E&E folks are doing is spot on: keeping the passing percentages roughly the same while making the exams progressively more difficult.

[Hawa]

The exams are a weed out system. In the Exam C ASM manual, there is a problem from 1992 where they gave you the pdf of an exponential and asked you to find the maximum likelihood estimate of the pdf. Now an Exam C problem would assume that anyone who didn't know that was a total idiot. With the advent of quite a competitive study manual market, college actuarial programs all over the place, internet chatting aboiut exams, and more people wanting to become actuaries (for the chicks of course), exams are becoming more and more involved. I wonder what exams will be like in 25 years.

A relevant story from back home. There was this prestigious college and it used to give admission on the basis of high school marks. When I joined the college, the merit was something like 91% marks in high school. Remember, it was annual exam system, where the person takes one big exam after two years. It was hard to get high marks.

20 years before me, the merit for admission in college was something < 60%. The merit was increasing every year as the population of the country was increasing and more people were getting education. We used to laugh that after 20 years a person with 110% marks in high school will get admission in college.

So, after 25 years, the exam M will have three times as much material as now.
One of my senior colleagues say that, 25 years before, exam material was not huge and number of people pursuing the exams were low, too.

[MNBridge]

And I think the answer really depends on what you think the purpose of the exams is. If the purpose of the exams is criterion-based [I'm trying to type this with a straight face] then it clearly isn't. The purpose of a criterion-based exam is to make sure that you have a minimum standard of knowledge among passers. Well, if it's now easier to acquire that minimum standard of knowledge, be it from better calculators, better study guides, more communication with other exam-takers, better seminars/courses teaching the material - none of that should matter. If more people are acquiring the minimum standard of knowledge, however they're acquiring it, then more people should pass the exams!

So based on this a doctor who comes out of Medical School now should be expected to have the same knowledge base as one who came out in 1970?

To expect them to know more today is proof that the only purpose for medical school is to keep the pay for doctors high?

Would an Actuary who achieved FCAS in 1970 be an effective Actuary today? Not if they have not learned anything new.

[MNBridge]

Yes, I have. And those are the reasons why the dynamics of exams have changed. Problems from 1992 (what is the MLE of an exponential) are way beyond basic in 2006. The underlying actuarial message ("another purpose" as you put it) is still the same though. They just test differently to accomodate the dynamic pool of candidates and the tools they have at their disposal (e.g better calculators and manuals).


Based on this post, I wonder if you know what the other purpose is.

[Hawa]

So based on this a doctor who comes out of Medical School now should be expected to have the same knowledge base as one who came out in 1970?

To expect them to know more today is proof that the only purpose for medical school is to keep the pay for doctors high?

Would an Actuary who achieved FCAS in 1970 be an effective Actuary today? Not if they have not learned anything new.

I agree :tup:

The knowledge base in all fields is contantly increasing since beginning. People are expected to know more. But, in some fields the exams are just a barrier to stop the entry of people into the profession. In my case, I knew the material of one of SOA exams lot more the time I failed it than the time I passed it. The time I passed, I just ignored the real knowledge stuff and learnt some exam passing tricks.

Some exams are just there to limit the supply and sometimes the details oriented people are left out. Some exams are trying to trick the students and not testing the knowledge needed for the subject.

May be after the tricky exams, the person becomes more tricky and less professional....

It is well justified if the purpose is to teach tricks, limit the supply and keep the salaries high rather than teach and test the subject material....:viola:

[MNBridge]

I agree :tup:

The knowledge base in all fields is contantly increasing since beginning. People are expected to know more. But, in some fields the exams are just a barrier to stop the entry of people into the profession. In my case, I knew the material of one of SOA exams lot more the time I failed it than the time I passed it.
Yes there are Type I and Type II errors in deciding who passes and fails.

Given the small population of people taking exams and how horribly many exams questions are written these errors may be higher than we would like.

The time I passed, I just ignored the real knowledge stuff and learnt some exam passing tricks.

I would guess you knew more than you may have thought you did.

People study for 'How to take' SAT's as well. There is certainly some benefit to understanding 'HOW' to take the exams as efficiently as possible.


Some exams are just there to limit the supply and sometimes the details oriented people are left out. Some exams are trying to trick the students and not testing the knowledge needed for the subject.

May be after the tricky exams, the person becomes more tricky and less professional....

Did you?


It is well justified if the purpose is to teach tricks, limit the supply and keep the salaries high rather than teach and test the subject material....:viola:

I keep seeing this 'limit the supply' thing. I still contend that anyone who has the ability to be a very good Actuary has the ability to pass the exams.
I don't believe there is one exam writer or grader out there who sees their job as one to 'limit supply'.

If you know the basics and fundamentals of any exam you will pass. Period. You may not get 100% or be able to answer every question, but you will pass. Until the pass marks reach 90%+ having a few really really mudane or horribly written questions will not stop someone from passing. [Though it will give them a reason to blame something other than themselves]

Could the exams be better? Unbelievably so. Do I think that stops people from becoming Actuaries who have the talent and desire to be one? No.