Does anyone else think that CT8 tries to cover too much ground? I think everything up to the last 2 chapters has sufficient detail to be understandable, but the last two chapters are just silly. I might be being thick, but there just doesn't seem to be enough detail for me to see why the interest rate models can be used to price bonds. If my understanding is correct there is no more mathematical theory on these topics if you don't do st6. It doesn't seem like a good idea that you can qualify with such a wooly understanding of these topics. In my mind CT7 should be scrapped and CT8 split into two exams and done well. Thoughts?
104 views and no responses... Someone tell me if I'm silly or not! Is it such a good idea that Actuaries so readily outsource their risk neutral ESGs , when CT8 is so weak outside of the basic Black Scholes case? Again, I have no idea what's in CA1/ST2/ST4/SA2/SA4, but if it is the case you can qualify in life/pensions without a proper understanding of the maths underlying this stuff then I'm worried! We could put all the real world modelling into a new CT7 along with some stuff on ALM and cover risk neutral valuation properly in CT8. Having studied, but not yet passed (figures crossed) all the CTs, I have to say I feel a bit short changed so far! Makes me think actuaries are trained to blag rather than do! I hope that will provoke at least some response! Elroy.
What do you work in? Do you (or your superiors) do this stuff daily? Sorry to break this to you, but this feeling may very well get worse. There is a move away from the mathematics and theory, and some (albeit a few) real world practicalities get thrown in. Two sides to the coin here - Stick to the theory and be rigorous etc, or stick to what really matters in the real world. I suspect (although things may be different in the UK) that many actuaries can go about their jobs quite ok without knowing the finer points of interest rate models as an example. Bear in mind that the CT's are "core", ie they give an overview of the technicalities that all actuaries should know. They aren't meant to be the complete book of knowledge for every actuary. Put it this way, do you expect to be able to head off the technical team of the CMI (having studied mortality in CT4). Mortality is something all actuaries should have a basic grasp of, but CT4 doesn't really cover all that is needed for a specialist, eg stochastic projection methods. I don't know if there is any more in ST2, but certainly someone who does ST/A 5/6 won't get anything more. One could argue that it is more important for an actuary to be very knowledgeable in mortality than bond option pricing. Bottom line is that the exams are simply the (possibly failed) attempt to generate new actuaries to meet a minimum standard in line with what employers, clients, etc expect of new actuaries. By no means are you going to learn everything you need from them, nor are you going to find most of it useful in the real world. I personally would have liked to study this in more detail in ST6, but realised that it would have zero value in my work. (I work in pensions with an underdeveloped investment market - simple put/call options are a stretch)
Huzzah! Maybe they get along just fine because they don't know what they don't know and are audited and overseen by the very same clique........
