Just going through the April 2009 examiner's report and wondered whether they could have spent a little more time putting it together. The solution for Q4 says "(Can also calculate x using Langrangian multipliers)". Could they not have shown this method in full? (as this was the way I did it and I wanted to find my mistake). Also the Q7 solution is badly formatted and in its equations has things like "Integral from...", "Phi(..)", "S_1" and "sqrt(2)". I can understand the difficulty if they were written on a thread, but surely they can do better in a word document?! Sorry - just fancied a moan instead of doing some actual studying
I totally agree...I'm currently looking at question 7 and I can't make sense of part (iii)....could someone please explain it to me? It's the line where they introduce "phi" that I'm getting confused. I assume they're using page 18 of the Tables but I can't make sense of it.
i also agree The answers to ct8 papers from the last few years all seem lacking to me , on question 7 I can barely read it , they haven't even bothered to space out the math so ya can tell whats going on. On question 10 i cant get the answer they have and i cant check anything cause the whole answer is written in general and the answer magically appears on the last line , great. Also question 3 part (ii) , the answer is labeled all wrong , thought for a second it was an answer to a different question. There are probably many other things I would like to moan about instead of studying but the books are calling me , think the moral of the story is ct8 is incredibly hard , so the least the examiners could do is write out beautifully clear answers to all the multiple methods of doing questions.
I wonder if they're deliberately a bit rubbish so you're more likely to buy the ASSET pack They must have to produce a proper set of solutions with the marking schedule they give to the exam markers, so why can't they give us that? Crazy
April 2009, Q10(ii),(iii) Here are a few more details in the hope this enables you to check your working: (ii) q=0.7 Final payoffs (from the top)=43.68, 17.76, 0, 0 Discounting these back to t=0 should give 16.68 (iii) Of the 4 possible paths that give a payoff under (ii), 2 of these don't go above 80, so won't give a payoff under the knock-in option. So instead of 3 ways to get a payoff of 17.76, there's now only one way, giving an answer of 12.86
ASET solves the problem. The CT8 Examiner's Reports just don't explain the solution. They are just dry answers!
The actuarial profession is responsible for the Examiners' Reports, which are provided as a record of what was expected and also to be helpful for future students. ActEd is separate from the profession and we produce ASET solely to be helpful to students in their exam preparation. We have no say over the quality of the Examiners' Reports and the profession has nothing to gain by making them "a bit rubbish". The Examiners' Report is the Marking Schedule with the actual mark allocations deleted and (usually) commentary added about how candidates have fared. There is no section of the solutions that is removed.
Mike I obtained q as 0.7209 using exp(r)-d/u-d is your 0.7 an approximation of this?because my final answer is 17.51 pounds.
Unfortunately you can't use that formula for q directly as we're not given a continuously-compounded risk free rate. We need to use: q= (1+r)-d / u-d, which gives 0.7 exactly
