### Actuarial Math Student Association

# About Actuaries

## What is an Actuary?

An Actuary is a business professional who analyzes the financial consequences of risk. Actuaries use mathematics, statistics, and financial theory to study uncertain future events, especially those of concern to insurance and pension programs. Actuaries may work for insurance companies, consulting firms, government, employee benefits departments of large corporations, hospitals, banks and investment firms, or, more generally, in businesses that need to manage financial risk. A career as an Actuary is better described as a “business” career with a mathematical basis than as a “technical” mathematical career.

If you aren’t sure if this is the right career for you, keep reading. An actuary is consistently rated as one of the best jobs. A job as an actuary entails very little stress, after the exam process. Low stress, high intellectual challenge, flexible hours, and high salary level are some factors contributing to overall job satisfaction. Actuaries have virtually unlimited opportunities for advancement. Many CFOs and CEOs around the country were actuaries.

## How do I become an actuary?

Actuaries are business mathematicians. In order to enjoy being an actuary, you must enjoy statistics, finance, and other mathematical business related topics. Most actuaries graduate college with some form of mathematics degree. MTSU is one of the few schools in the country to offer a major in mathematics concentrated on actuarial science. Attaining a four year degree in any field is the first step that companies require for you to become an actuary, though.

Actuaries must also go through a rigorous exam process. Usually, while still in college, actuarial students begin the exam process. The Exams are administered by two main societies, the Society of Actuaries, which is related to life and health insurance, and the Casualty Actuarial Society, which deals with risk like auto insurance and property liabilities. The first, second, and fourth exams are administered jointly by the two societies. All other exams are separate. The first exam tests an actuarial student on probability and statistics, the second on financial mathematics, and the fourth on the construction of actuarial models. For the SOA, the third exam, Exam M, is the first test on actuarial models, which deals with financial economics and life contingencies. The CAS Course 3 exam is basically the same test, but without life contingincies, since the CAS does not deal with life models. These first four exams are known as the Preliminary Exams.

The next step would be to satisfy Validation by Educational Experience (VEE). Material learned in VEE Credit courses was at one time part of the exam process. The SOA and CAS decided that this material could be more easily learned separate from the exams. To find out more about VEE, go to the previous link or to the SOA VEE Process description.

At this time, you probably would have made a decision on whether to join the SOA or CAS. The courses and exams needed for each society is different. To find out what is required from each, view the syllabus for the SOA and CAS. After completing the first set of exams, actuarial students may apply for Associateship, and after completing the last few exams, they will apply for Fellowship. These two designations are the equivalent educational achievement level of Masters and Doctorate degrees. Completing the exam process is a very important achievement as an actuary.

MTSU offers courses that will prepare students for exams, as well as courses that satisfy the requirements for VEE credit. To graduate with a Mathematics Degree with a concentration in Actuarial Science, you will also need to fulfill the basic requirements of the MTSU Mathematics Department.

For course listings, check the web version of the MTSU Undergraduate Catalog.

## The following courses will help prepare you for each exam listed.

### SOA Exam P / CAS Exam -1

- ACSI 4140-Mathematical Foundations of Actuarial Science

This course should be taken after STAT 3150-Mathematical Statistics I. ACSI 4140 is suggested to be taken along with STAT 4190-Mathematical Statistics II. ACSI 4140 will go over the majority of topics on the syllabus for Exam P/1. It provides students with many practice problems, and gives students the opportunity to get direct instruction on topics that may be causing them problems. This course will not provide the sufficient amount of study time needed for Exam P/1. Actuarial students are expected to do the majority of their study time out of class and on their own. Exam P is three hours in length for 30 questions. The SOA and CAS suggest 100 hours of study for every hour of exam time, so Exam P will require 300 hours study. Take this amount of study time VERY SERIOUS. If you study much less, it will be difficult to pass this exam.

### SOA Exam FM / CAS Exam -2

- ACSI 4230-Mathematics of Compound Interest
- ACSI 4240-Mathematics of Interest Theory, Economics and Finance

These courses will cover the majority of topics on the syllabus for Exam FM/2. As with Exam P, these courses do not provide sufficient study time for Exam FM. This exam is 2.5 hours for 30 questions. That means that a minimum of 250 hours of study are suggested.

### SOA Exam M / CAS Exam -3

- STAT 4320-Probability and Stochastic Processes
- ACSI 4330-Actuarial Mathematics I
- ACSI 4340-Actuarial Mathematics II

Even though the third exam is separate for SOA and CAS, the material in these courses will help for both. These courses will cover the majority of topics on the syllabus for Exam M and Exam 3. The length of Exam M is five hours with about 40 questions. The length of Exam 3 is four hours, and I am unsure of the total questions.

### SOA Course 6 / CAS Course 6

- ACSI 4630-Mathematics of Risk Management
- ACSI 4640-Mathematics of Options, Futures, and Other Derivatives

These courses are just introductory courses. No students are prepared for the sixth exam, but MTSU has a very good Risk Management professor, Dr. Valery Kholodnyi. He introduces the topics, but keeps the course on a level understandable by students beginning actuarial work.

### Validation by Educational Experience Credit

- STAT 4200-Statistical Forecasting
- This course is approved for credit for the VEE-Applied Statistical Methods requirement.

- ACSI 4200-Intro. to Mathematics of Investment
- ACSI 4220-Mathematics of Pricing Theory

These courses together satisfy the VEE-Corporate Finance requirement(Pending).

- ECON 2410-Principles of Economics, Macroeconomics
- ECON 2420-Principles of Economics, Microeconomics
- These courses together satisfy the VEE-Economics requirement.

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## Contact Us

**Actuarial Mathematical Student Association**

Dr. Don Hong - (615)904-8339

Dr. Lu Xiong - (615)898-5471

DEPARTMENT OF MATHEMATICAL SCIENCES

Middle Tennessee State University

P.O. BOX 34 c/o Don Hong, Lu Xiong

Murfreesboro, Tennessee 37132