Question 38,39&40 SOA FM SAMPLE

[OmgItsNiko]

Hey guys, I was doing the SOA math part sample and came across questions 38,39 and 40, i still dont get them properly, I dont recall seing such problems in the ASM (9th ed) manual, can somebody please show me the idea behind the solutions or tell me where in ASM i can find the theory behind the questions, thanks!

[Kaner3339]

where can I find these questions?

[OmgItsNiko]

http://actuary.brightsea.ca/


under financial mathematics -> official sample questions

[Kaner3339]

Oh I've seen questions like that before. Aren't there ones like that on some of the ASM exams? I found they were all pretty much take the money you get in numerator and divide by the amount of margin for yield. I feel like they are testing knowledge of the lingo and making sure you get all the cash inflows and outflows right. I'll post a specific solution and explain the logic.

[Kaner3339]

The solutions in that guide are a little different from the ASM manuals but I definitely felt like I understood all of the examples in ASM like No 27 page 700, no 23 page 693, no 27 page 680...I'm looking at ninth edition of ASM.

[Kaner3339]

I'll work my own solutions to the problems you showed and make sure they're the same.

[Kaner3339]

Yea I just did number 39 by setting it up just like ASM. Do it like this

2(P - 760 - 32 + .5(.06)P)/.5P = (P - 766 + .5P(.06))/.5P.

This form makes sense to me because it's the net cash on top ( inflows minus outflows) and on bottom the money you had to invest for the duration of the investment ( the margin). For all the practice problems I've seen I've done it like this and it works.
It must be numerically equal to what those solutions are but setting it up like this makes more sense to me.

[OmgItsNiko]

Thanks, a friend mentioned to me that in ASM 11th ed, on the 2nd page, 2nd paragraph it says that we have to skip #38 to 44 in the sample.

[OmgItsNiko]

Even in the SOA official sample solution those questions are skyped

[Kaner3339]

Yea I know they are skipped but I'm not sure of the reason why. If it was because that stuff isn't tested anymore then they should have put more immunization questions on it because that stuff was introduced in 2005 from what I've been told. So that probably isn't that reason. I wouldn't be happy to skip that material and then get the question on my exam considering it's pretty easy stuff.