Actuarial Outpost Efficiency: Annuities questions
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#1
03-08-2007, 10:29 AM
 macTEN Member Join Date: Feb 2007 Posts: 205
Efficiency: Annuities questions

MY QUESTION IS HOW DO U KNOW WHEN TO USE A FORMULA OR BREAK DOWN A CASH FLOW AND ANALYZING USING ALGEBRA OR VISUALLY TACKLING THE PROBLEM?

Are there clues from the problems as to which method to use?

In other words what is the most efficient way to solve annuity problems (FM as a whole) under time pressure?
Any suggestions. Thanks
#2
03-08-2007, 11:09 AM
 Bama Gambler James Washer / Notes Contributor SOA Join Date: Jan 2002 Location: B'ham, AL Posts: 16,139

Like I said in the other thread, I much prefer time diagrams. I go as far as I can with those and then use algebra the rest of the way.

My advice - practice, practice, practice.
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#3
03-08-2007, 11:12 AM
 no driver Note Contributor SOA Join Date: Jan 2006 Studying for ERM Posts: 2,073

Quote:
 Originally Posted by macTEN MY QUESTION IS HOW DO U KNOW WHEN TO USE A FORMULA OR BREAK DOWN A CASH FLOW AND ANALYZING USING ALGEBRA OR VISUALLY TACKLING THE PROBLEM? Are there clues from the problems as to which method to use? In other words what is the most efficient way to solve annuity problems (FM as a whole) under time pressure? Any suggestions. Thanks
The answer: Do lots of problems, figure out what works for you. You'll probably find that there's a blend of approaches and you'll figure out when each is appropriate.

I know this sounds like a cop out, but it's the real answer. Banging your head against the wall and figuring out how to approach problems that have various wrinkles in them now will make you efficient by the time you take the exam.

When you run into a problem that you solve incorrectly, figure out why. Did you forget a step in the setup? Did you mix up your symbols/terms? Did you make an algebra mistake? Has a particular concept not quite sunk in yet? Be sure to learn from your mistakes. Not repeating them later makes you efficient when you take the exam.

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