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  #21  
Old 10-23-2009, 10:02 AM
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Originally Posted by jedi2006 View Post
can't agree more...I don't even know why we as actuaries would want to know how to price options...it is for those financial engineers...
Some of my work involves reserving for equity indexed annuities. We use call options to insure that we dont end up losing money on the spread.
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  #22  
Old 10-23-2009, 10:03 AM
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Some of my work involves reserving for equity indexed annuities. We use call options to insure that we dont end up losing money on the spread.
Me too!
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  #23  
Old 10-23-2009, 12:57 PM
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really? Do tell!

He probably took exam 2 before Derivatives were added to the syllabus.
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  #24  
Old 10-23-2009, 01:31 PM
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Stuff too useless to toss on the other exams
I can't emphasize enough exactly how accurate this statement is.

I can't speak for any other actuarial work accept for Health (and to a lesser extent P&C). Perhaps pension and life make use of this knowledge - I have no idea. I've been working in the health field for four years now. That's a drop in the bucket compared to most people but you would think in four years that I would have AT LEAST heard of actuaries having the need to price an option. Guess what? I haven't. And to that extent I have already had two FSA's tell me I'll never use anything I learn on the preliminary exams (at least in health). Of the five preliminaries, MFE is easily the most useless.

This test should not be part of the ASA designation requirement. Period. Put it in the specialty track section for the people who might actually use it. I want to work in the health field from here on out. I don't need to price stock options.
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  #25  
Old 10-23-2009, 01:34 PM
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Waterloo??!!!??
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He probably took exam 2 before Derivatives were added to the syllabus.
taken the British exams...
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  #26  
Old 10-23-2009, 03:02 PM
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I can't emphasize enough exactly how accurate this statement is.

...

This test should not be part of the ASA designation requirement. Period. Put it in the specialty track section for the people who might actually use it. I want to work in the health field from here on out. I don't need to price stock options.

I sat in on a meeting and a consultant was using a Brownian Motion model to predict losses (and ultimately premium requirements) and a state regulator who was there said she had never seen it modeled that way (shows just how new this is) and really enjoyed the analysis. Just because we are pricing a stock or a bond using BM in this exam doesn't mean the model can't be used in other fields. Who knows, in 20 years, new health candidates may be studying a model you create based off these MFE models.

Also, just as ditka said, these financial models are fairly new to being used in other fields, but they are moving that way and may make older models obsolete quicker than you might think. IMHO, the most cutting edge models tend to come from the financial industry, and the best of these models will slowly filter into Insurance fields as they become more popular.

Last edited by scotth; 10-23-2009 at 03:38 PM..
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  #27  
Old 10-23-2009, 03:10 PM
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Originally Posted by andrew_h View Post
I can't emphasize enough exactly how accurate this statement is.

I can't speak for any other actuarial work accept for Health (and to a lesser extent P&C). Perhaps pension and life make use of this knowledge - I have no idea. I've been working in the health field for four years now. That's a drop in the bucket compared to most people but you would think in four years that I would have AT LEAST heard of actuaries having the need to price an option. Guess what? I haven't. And to that extent I have already had two FSA's tell me I'll never use anything I learn on the preliminary exams (at least in health). Of the five preliminaries, MFE is easily the most useless.

This test should not be part of the ASA designation requirement. Period. Put it in the specialty track section for the people who might actually use it. I want to work in the health field from here on out. I don't need to price stock options.
Have you heard of reserving with a stochastic model? Have you heard of an insurance policy? Look, the formulas, for the exam purpose, are applied to the stock market, but can also be applied to insurance policies.

Also, depending on when the FSAs you are talking to got their credentials, most of the material could have been completely different. Additionally, the methods used right now for pricing and reserving could become obsolete in five years, and you will need to reevaluate your current methods. You never know.
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  #28  
Old 10-23-2009, 03:14 PM
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I could say that exam C is useless for me because I don't work in the P&C field. But I won't.
You never know when something you learned is going to come in useful.
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