A confuse about the information sources in X1.1

[Smith]

As taught by the CMP, all information included in the answer for CP3 exam should only be from the advance material and the question body. However, in the course of studying the X1.1, I'm really confused by the specimen solution, that there are several points, from my point of view, containing information that are not provided by the advance material and the question, such as:

1) the second paragraph of Executive summary, "...he removed...the requirement for an annuity to be purchased...", but there are not explicit wordings stating such requirement in given material.

2) the fourth paragraph of Executive summary, "Those who choose to purchase annuities are more likely to be in good health and live for longer." Although it's a common sense knowledge for actuarial students, but it seems not explicit stated in the given information.

3) the fifth paragraph of Executive summary, "we need to re-price annuity contracts...", this remedy solution is not mentioned in the given material too.

4) the last paragraph of the section of Implications for business and profit, "...the share price will react very swiftly...", this information is also not mentioned in the given material.

5) the first paragraph of the section of Implications for business mix and profit, the two bulletin points seems not given by the advance material and the question body.

6) the third bulletin point of the section of How to maintain profitability, "offering annuities where payments increase with inflation", is also not mentioned in the given material.

Indeed, above points, regarding the knowledge itself, are normal for actuarial students. But is it contradict with the stipulated principle of CP3 in the syllabus, that it is just a test of your ability to filter information and communicate it to a particular audience, instead of delivering some common actuarial points?

Thanks for advice!

 

[Helen Evans]

Thank you for your post and you've raised some interesting issues. The key issue here I think is that there is a distinction between necessary ‘information’ (in the sense of data describing the specifics of the scenario) and necessary ‘explanation’ (in the sense of ensuring understanding of that scenario). I agree all the necessary ‘information’ must be in the advance material / question paper, but a pre-requisite of taking the paper is that the candidate has a threshold level of understanding of certain concepts, which then don’t need ‘explanation’ in the advance material / question paper.

The first point you raised is 'information', as in the question The Daily Times article does say that people retiring 'will no longer have to purchase an annuity.' The other points it could be argued are explanation or drawing of basic conclusions which as you commented we could view as common sense knowledge for actuarial students.

I hope your studies are going well.

 

[Smith]

Thank you for your advice, Helen. Have to say, feel that the communication exam is really a course of art!