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  #51  
Old 10-30-2019, 02:23 PM
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XP-SteveScoles XP-SteveScoles is offline
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Good luck to everyone on the SDM exam tomorrow.

I know the XP students have prepared well, but it is always feels like a tough exam - just stick to what we have trained for through the practice exams/feedback/answer commentary to score the most points you can on each question.

We had record numbers of students sign up with XP this sitting for SDM - thank you for being part of our program to push you where you need to be for the unique challenges of SDM.

Good luck!!!

Steve
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Using anything less is clearly a very poor strategic decision
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  #52  
Old 10-31-2019, 04:50 PM
BobSaccamano BobSaccamano is offline
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Well that was... something. Definitely the hardest actuarial test I’ve taken so far. When can we talk about content?
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  #53  
Old 10-31-2019, 04:59 PM
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Best to wait till tomorrow. Hawaii goes till about 11PM+ EST.

Steve
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  #54  
Old 10-31-2019, 05:29 PM
BobSaccamano BobSaccamano is offline
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Ok see you all tomorrow then.
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  #55  
Old 11-01-2019, 02:47 AM
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I believe it is safe to start talking now about the exam. This exam is ALWAYS very hard (it's a quite funny that there was a bit of debate on this forum at the start of the sitting whether SDM was the hardest exam or not!)

What were the subjective feelings and the details of the questions?
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  #56  
Old 11-01-2019, 11:22 AM
MD1313 MD1313 is offline
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Default Fall 2019-Exam SDM

I thought I did the worst I've done on an essay exam yet. I got a 9 and 8 on my last two though, so I'm hoping worse is still enough for a 6.

The roughest questions for me:
1) In one question they explained the opinions of three VPs and asked to name their biases. The biases were fine, but then it asked to define each of their "task roles". What does that mean? I ended up just writing that they were all showing a competing conflict response. lol, ready to get 0 points on that 1.5 point question.
2) There was an overhead allocation question that I bombed. I know the formulas for spending, efficiency and volume variance but I could not figure out how to calculate them with the info given. The question built off of itself and I was struggling to figure out the rest without the first. It went something like
- Here is the info for BJT's overhead.
- Are they over or underabsorbed?
- Calculate the three components: spending, efficiency and volume variance.
- An exec wants to change the fixed overhead. After the change the overhead variances are this. Explain what the impact of the change was.
- This exec's comp is based on # of tires sold. Explain why she would want one allocation method over the other. Recommend a change to her comp.
- Sketch the current decision management and decision control structure for the exec's OH decision.
- Recommend a change to the structure.
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  #57  
Old 11-01-2019, 12:05 PM
inveniamviam inveniamviam is offline
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Quote:
Originally Posted by MD1313 View Post
2) There was an overhead allocation question that I bombed. I know the formulas for spending, efficiency and volume variance but I could not figure out how to calculate them with the info given. The question built off of itself and I was struggling to figure out the rest without the first.
The overhead allocation question was so strange because (as far as I could tell/find) they did not provide actual volume. We had budgeted volume, budgeted overhead (all variable expenses), and standard volume, and actual output, but no actual volume.

So when I did the spending/efficiency/variance calculations, I literally just wrote that I don't see actual volume, but for the sake of getting through the question am going to assume 30,000 (reasonable ish number to help me get through the rest of the question and actually be able to answer things). I answered the rest of the parts based on how the variances should have changed if part of the OH was fixed instead of all variable. I really think they just did not provide part of the info needed!
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  #58  
Old 11-01-2019, 12:22 PM
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Quote:
Originally Posted by inveniamviam View Post
So when I did the spending/efficiency/variance calculations, I literally just wrote that I don't see actual volume, but for the sake of getting through the question am going to assume 30,000 (reasonable ish number to help me get through the rest of the question and actually be able to answer things). I answered the rest of the parts based on how the variances should have changed if part of the OH was fixed instead of all variable. I really think they just did not provide part of the info needed!
That was a very good strategy. When you can't figure out a calculation, you can still get a lot of marks from showing that for most of it, you know what to do. And then the other follow-up questions will simply be judged on how you answered relative to the answer you gave above (whether it was correct or not).

Steve
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  #59  
Old 11-01-2019, 12:33 PM
inveniamviam inveniamviam is offline
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A few things I found interesting about the exam:
1 - all questions were about the case study (100%!)
2 - out of 9 questions, no questions about Blue Ocean
3 - so many big topics not tested, and some topics tested multiple times (OH allocation, for example, and so many about biases - not small topics by any means but repetitive!)

Here was what I could remember for what was tested, see if anyone remembers more or differently!

Morning session, 5 questions:
1 - 8 points: Big Ben Bank - 6 pts: the question listed the drawbacks of using liquidity ratios from that study note and said to analyze each of these drawback's effect on liquidity analysis for Big Ben; 2 pts: Describe 2 black swan events that could effect liquidity for Big Ben

2 - 14 points: Blue Jay Air - discrete optimization (define this for 1 point), then detailed question about how many seats to offer on the plane between economy and comfort class tickets, with different prices and different seat availability depending on the class (presumably because comfort class seats are larger?). This was for planning their new international offerings. Then they changed one of the restraints and added a new one and said how does that change your optimal answer. Then asked about practical considerations for how this model should be used / implemented.

3 - 13 points: Blue Jay Tire - person in the organization has 2 ideas: 1) raising tire prices because of lack of new competition at the current price, and 2) asking the supplier to lower the price of tires/rubber. Analyze the first idea with respect to the power of buyers, analyze the first idea with respect to the threat of new entrants, analyze the second idea with respect to power of suppliers.

Then accounting allocation methods for two types of tire, they are considering increasing production of one of the tires to move costs into inventory. Absorption costing, then variable costing allocated based on total direct labor/materials cost, then variable costing allocated based on total "of all costs except fixed overhead" and there was also variable overhead per unit - needed to actually calculate profits under each of these three methods for 2 different tire models (wasn't clear to me if they meant profit per tire or total profit for all tires sold of those models) and some question about which is most appropriate.

4 - 13 points: Blue Jay Tire - of these four things (labor relations management, distributor management, finance / accounting, and social media management), which 2 are core competencies for BJT? Which of these is most likely to be outsourced? Now assume BJT is laying off employees due to outsourcing and is going to send them a memo about it, what are 1) 2 individual barriers to communication that could lead to the memo being negatively perceived and ways each of these can be mitigated and 2) 2 organizational barriers to communication that could lead to the memo being negatively perceived and ways each of these can be mitigated. Then make a diagram of the actual memo to be sent using the "top 2 levels" of the pyramid principle.

5 - 12 points: Big Ben Bank - they asked about a few things being considered to be implemented: 1) cap on credited interest rate for LTPPF, 2) withdrawal limit on assets of 10% per year (beyond that gets a haircut) for the first 10 years, no limit beyond 10 years, and 3) new fixed benefit product offered through digital. I think question was to analyze each option with respect to BBB's objectives and with respect to their secondary risks. Then recommend what to implement. Then the last part of the question was that you get an email from a colleague who says "all the companies use digital, so we should do it too; I read that XYZ company did digital and they were successful! We need to innovate because innovation is important and if you don't then you'll be extinct like the dinosaurs!" 3 point question to describe biases in the guy's email.

Afternoon harder to remember, 4 questions:

6 - Darwin - copied in chart from the very last page of the case study and said to calculate their statutory capital charge (gave some more info about the formula, square root of the sum of squares of various pieces of capital charges) using the numbers in the chart, then calculate their statutory capital ratio (statutory equity / the charge number that you calculated). All of that was only 1-2 points which wasn't enough time for me to actually write out the formulas plug in the numbers and put into my calculator (lol...). They said they're considering reallocating some of the corporate bonds assets into high yield bonds and/or commercial mortgages and they want to maximize their expected return, and they need to maintain a capital ratio of 250%. Construct an objective function and provide 3 constraints that Darwin should "consider" for this problem. Using 2 of the constraints, find an optimal solution (the language was a little weird, kind of like "suggested" solution that could work).

One of 7-8-9 was about Frenz, calculate SPI for both Luna Beans and Vida Coffee (total value of deliveries and non-conformance charges given in chart), list 2 drawbacks of SPI, calculate q-adjusted SPI for both (total value and # of deliveries for both and for all suppliers was also in chart), interpret the results. Frenz is considering an alternative cooperative strategy with either King Coffee or Luna Beans instead of the Vietombia proposal, which company would be the best partner and why, what corporate level cooperative strategy would they use and describe how it would work, list an advantage and a disadvantage of that strategy vs. the Vietombia government proposal.

Another of 7-8-9 had the question described above about biases, task roles.

Another of 7-8-9 had the question described above about overhead variance allocation, with a chart to assume all OH is variable, budgeted volume and budgeted OH provided, actual output and standard volume provided, and based on all that, was OH over- or under-absorbed? Calculate the three components: spending, efficiency and volume variance. Executive decides $1.5M of the OH should be fixed. We know that her compensation is based on # of tires sold. They provided the post-fixed-change overhead variances, and asked us to explain what the impact of the change was on each (favorable/unfavorable/maybe why). They told us the exec's comp is a base salary, a 100% bonus if her division meets its targets, and then additional deferred comp that vests after 8 years. Asked us to explain why she is incentivized to change the allocation method, and recommend changes to her compensation structure (same amt of pay) that would be better. Sketch the current Decision Management and Decision Control Structure for the OH allocation decision (not sure if that was the exact capitalized term they used).

Can't remember the rest!
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Last edited by inveniamviam; 11-01-2019 at 12:39 PM..
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  #60  
Old 11-02-2019, 04:15 PM
BobSaccamano BobSaccamano is offline
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I felt the same way about the OH allocation question. It seemed like they were missing actual volume for the question based on the follow up questions. Based on budgeted volume, actual units and standard volume, the only conclusion I could come to was that AV=SV. But in the second part of the question, when they introduced fixed overhead, the efficiency variance changed. That didn’t make sense to me since the efficiency variance should still have been zero. That’s what I noted. I also emailed the soa to say I thought that was missing in the question stem. No idea what will come of it, but I wanted to do it with the exam fresh in my mind (sorry Steve I’d already emailed them by the time I got yours).
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