ST6 September exam

Did you sit the September exam in ST6?

How did you think it compared with the April one?

 

I found this exam incredibly difficult and I don't expect to pass it. A little background first:-

I took ST6 in April and thought I knew the course well, was confident going in and quite "enjoyed" the paper thinking it to be quite fair at the time. In the event I failed and noticed that the overall pass rate was very low. Initially I believe the pass rate was around 18% but with some re-grading this moved up to just over 19%. With no explanation, one week later myy own paper was re-graded from FB to FA. The overall pass rate is clearly some way below the average pass rate for the rest of the courses - which tend to hover between 35%-40%.

This time, if anything I felt slightly less well prepared as I had been concentrating on a different subject perhaps slightly to the detriment of ST6. By the end of the exam I felt quite devasted and felt it was a very tough, marginally unfair paper. With a little persepctive and distance I can now see that it wasn't as bad as I initally thought - I just underperformed. To go through the paper question by question, with a small description and an opinion on each:-

1. Bookwork, fair.
2. Introduce new concept - students should be able to work with this. Ok.
3. Trouble! Q.3 Part (ii) Asks us for two derivations of Greeks where the portfolio consists of 3 different derivatives - each of which will have different values for the greeks in question. Only 2 marks were offered for this. I felt that I was missing something here. Derivations usually require a lot of work and I would expect either to state the greeks for 2 marks or derive them for more marks. (I admit I got a bit annoyed and flustered at this point).
4. A bit tricky but that should probably be the point. No complaints.
5. Black's approximation for the valuing of american style options. I hadn't boned up on the maths underlying this and got into trouble here. Probably got very few marks.
6. Bookwork with some application on risk measures. I found it dificult to apply pt. (ii) to pt. (iii).
7. Only aware of the concept of numeraire assets as I had scanned over them in a last minute revision attempt the night before. Wasn't very au fait with the application or theory but had a stab anyway. Tough question.
8. Yield curves. Bookwork. Fair enough.

As I understand it, this forum is not a chance to exchange views with the examiners or whoever designs the core reading. However, on the off chance that it is, I would suggest that, given the low pass rate in April and (albeit in my opinion) the relative difficulty of this exam (I'm prepared to put my money down and predict a pass rate below 30% again), perhaps the exams are being pitched at a higher level than the tuition materials teach at?

I would welcome any comments from the Institute about this subject and I would also welcome more information on further reading that could be done for this subject as there are no suggestions on the website. I'd also like to thank Acted for putting up this chat board and would encourage other students to post their views so's we can all learn a bit about how everyone else got on. (I would only be a little surprised to learn that everyone else thought it was a doddle and I'm just a thicko!).

Cheers,
Olly

 

I agree with Olly's comments although I'd go further to suggest that there is no way you would have been able to predict the type of exam ST6 has turned out to be this time last year.

Reading through the course notes you'd have at least expected a couple of meaty questions on Black-Scholes, the Binomial model and the Greeks but apart from a couple of marks here and there (eg the question Olly mentioned above) these have been largely ignored.

I understood ST6 to have been linked to the old CiD paper (it's even got CiD in the title! The specimen paper was old CiD questions) but the last two papers have been quite different. I think this has contributed to the low pass rate as not many could have prepared for the type of questions on offer. I certainly wasn't in April! (And not convinced I was in September....)

Is ActEd adapting their course notes and/or tutorials in line with the two exams? (i.e. less emphasis on the errors mentioned above which probably contribute to at least a third of the current course.)

Olly-I don't think that there would be many who would take you up and bet against a pass rate of over 30%!

Thanks

Richard

 

I think that you've made a perceptive point Richard. I think I probably failed the April exam because I was occasionally answering questions that they weren't asking - never a great mark winner! - and I had trouble with this one from the get go because it was focusing on areas that I hadn't got thoroughly competent at. Both times I have read the notes, done all assignments and Q&A banks, Mock exam and many past papers to prepare myself and felt reasonably comfortable going in only to get a shock.

Perhaps it is not, as I said in my first post, that the exams are at too high a level - and on reviewing the papers this may seem so, but that the course materials direct us too much towards some areas at the expense of others. It is not a large course so maybe the revision questions should be spread around the course a bit more.

On the other hand, if I pass, there's clearly nothing wrong with the materials and everything is rosy.

 

I think the september ST6 exam was probably just as hard as the April one.

Acted seems to have put more emphasis on 'calculation type' question than was necessary. The last 2 exams seem to have ignored the calculation type questions, which personally i don't think is a bad thing and should be kept at CT level anyway.

The martingale replication for derivatives pricing part of the course was also poorly explained and it lacked a bit of an overall view. This part is actually fairly simple once you get your head around it but i must admit the notes were somewhat confusing.

As for the actual september exam, there were a couple of hard questions, which i think are even harder considering the time pressure.

Question 4, in particular was (for me) a algebraic time waster. The only way you can do this question in 20 minutes is if you have done it recently. The hint at the bottom was more confusing than anything, especially if you try to force it and use it...

Question 5 looked obvious. I know this result but i never thought before about how to prove it. It didn't look easy.

Question 7 was actually doable. I couldn't remember the numeraire definition but part ii was actually much easier than it looked. It is easily solved in the hull book i believe. If you've seen it before it takes 5 minutes, if not, it might take you more like 15 or 20 and leave you frustrated.

As for the pass rate, last time ST1 had a pass rate of 53% compared with a revised 26% for ST6 if I am not mistaken. I do not believe the students taking ST1 are that more intelligent or more hard working than the ones taking ST6. If ST6 stays at the same pass rate level, it must mean that it is (a lot) harder than the rest. I thought all STs were of the same standard.

 

my view is that ST6 core reading simply replicates CT8, with a few bits added in

then you go to tutorials, consider the past CiD papers, and the specimen paper and start thinking the subject is the same as CT8, only that they'll ask harder questions

finally, you get a nasty shock in the exam room as you open the paper, only to find it completely different to anything that you were expecting - of course, this shouldn't have been the case if you were sitting the September exam, as you should have seen the April exam

I believe that those who pass this paper are those who made sure they understood every detail of every part of the notes and any questions they did - having done this, answering questions stretching the boundaries of the course should not be impossible

however, I do think its a bad situation to be in, to introduce a new paper that starts off with a 20% pass rate (apparently upped to 26%?!), and with it being blamed on the introduction of a questioning style no-one was expecting - I would place some of the blame on the Institute for not at least coming up with a couple of original questions in the new style on the specimen paper to warn students that the exam style is not going to be the same

 

I see your point about expectations being different.

So it begs the questions as u said
(a) we shoudl be warned that teh exam will be different

(b) if the core reading of ST6 is pure replication, then why is it being produced. The core reading is so small it actually gives the wrong impression that this is a small easy course.
giev mn the fact that the core reading has proved unghelpful one really has to specualte wether core reading is purely a fee earning exercise.

as someone said before in a post, no-one coudl have predicted thsi situation 12 months ago with ST6
-ST6 is a standard course on mathematical finance which is available at counteless universities and at countless web sites/texts
and yet we must study according to core reading that doesnt remotely equate to the exam -
the whole opaque arrangement has made standard material appear exceedingly difficult when it is not...

 

i agree on core reading bit....it is in no way close in giving QnA's which are similar to the ones which have appeared in the ST6 exam....it was more like we were reading for CT8....I also think ST6 was tougher than april sitting...as to one couldn't be prepared for the exam by just reading ActEd notes...i think one had to read Rennie and Baxter and Hull to be fully prepared for what was to come...

specifically, Questions on American optionsQ6 and averaging optionsQ5 were like unbearable...dunno if i'm gonna pass this one...oh lord plz help the poor souls who took ST6..

 

I was amazed that after the fiasco of the April ST6 exam that the guinea pigs, Staff Actuary and Examiners let the September exam out. They still have yet to sort out the problems with the specimen solutions to the April paper where the majority of answers come from Hull rather than Core Reading. Even after they re-issued the solutions they still have the fundamental problem that they had a very low pass rate for an exam with sensible Core Reading but a bad paper and ludicrous answers. I and most ansers went into the September exam fearing the worst and sadly the examiners didn't let us down.

While the September paper wasn't quite as bad, I still have visions of the future ASET for it saying that while the Examiners answers said so and so, they were not sure how this could be obtained from Core Reading... I think (for what it's worth) the relevant examining parties have continued to use Hull as the Core Reading / examination setting text, rather than what's actually in the Core Reading. I predict another sub-30% pass rate and some irate e-mails to the Institute

 

I know it's bad form to reply to my own post, but I understand that:

1. The Chief Examiner for the April paper initially wished to pass only 19% of people, this was the first list that went up (erroneously) on the web. This was challenged at an Examiners' meeting and he/she was asked to revisit the marking, which led to an actual pass rate of 26% (or whatever it was).

2. The Institute are aware that September has had issues as well. The Chair of the Education Committee had people within her own company complaining about it, so I would imagine that the discussions around the ST6 results will be clearly focused. They are certainly aware that ST6 is rapidly gaining a negative reputation.

3. The Institute have hinted (but no stronger than that) that while the Core Reading for next year remains virtually the same as this year, that there will be a statement about the importance (or lack of) of Hull.

4. You never know, it may be a different set of examiners next year, and/or the September paper may end up with a "nice" pass rate

 

Do you know who is responsible for setting the ST6 exam paper. Is it some derivatives whizz or something?

 

Interesting stuff Mr (or Ms?) Catcher. I'm interested to know how you came about this information...

 

Scc???

My guess is that Monkey Catcher has very close links with someone who's on the SCC (Student Consultative Commitee), which I think met on Friday???? Perhaps these things will be repeated in the minutes.

 

Is there any point continuing with ST6?

A 26% pass rate (I failed ) Surely there has to be some guidance from the Institute and the 2006 examiners now?!

Acted tutory people - Have you been given any guidance as to the significance of Hull? Makes me wonder about changing to a "safer" subject...

 

Ok, I appreciate this is verging on sour grapes, but looking purely at the Institute results:

ST1 - 48% pass rate
ST2 - 40.7%
ST3 - 39.0%
ST4 - 40.7%
ST5 - 38.2%
ST6 - 28.2%

I think I could probably make a case for ST6 being an outlier...

 

To answer my own question, references in the ST6 Examiners report quote the topic's location in Hull. I think there can be no doubt as to the significance of Hull in setting this year's papers.

 

ST1 is the way forward

There is a reference in the examiners report to B&R, Hull and a mysterious U. Does someone know what U stands for? Also the examiners report still doesn't have any comments on how each question was approached.

Looking at the pass rates for the STs for both the April and September sessions, it seems clear to me that the students studying ST6 are just not as good as the ones studying the other STs, and clearly the ones doing ST1 are far more intelligent than the rest. That's what the institute must believe, if they are able to publish results like that. Never mind that many students could be taking more than 1 ST subject.

I suspect we'll see a lot more people taking ST1 in the future. Healthcare is where you need to be. It gets you qualified quicker.

 

How many people wrote each one? From what I've heard (and this is just my impression), almost nobody is writing ST1 while a very large group is writing ST5 and ST6 - apparently under the belief that the investment-type papers are easier. So this could be a very simple explanation: the people writing ST1 are those actually working in Health and hence with some background.

 

It doesn't explain however that the pass rates for other STs are around 40% and ST6 is well below.

Furthermore, we all have to take one or 2 exams outside our field of experience so it isn't a 'new' thing. In the old system, no matter which field you worked in, you had to take Pensions, Life, GI and Investment.

I think the truth is that ST1 is a spin-off the old 302 exam, and health products used to be part of life (and GI to some extent) products, therefore it would favour people who have passed the life exam.

Finally, i doubt very much that there are so many health actuaries around...

 

Mysterious U

The U reference refers to the relevant ( ) Unit of Core Reading, which is only of any use to you if you have the stand-alone version of Core Reading! To see which chapter of the ActEd Course Notes this U reference ties up with you can use the table on page 2 of the ST6 Study Guide to look up the Syllabus Objective given on the Examiners' Report.

You also need to be careful with the Hull references. They seem to be to an old version of Hull, not the latest Sixth Edition. We'll be including up-to-date references in our ASET, to help students read further around the examined topics when they are revising.

 

ST6 and CID

I previously sat the CiD (April 2004) and failed. When I retook the ST6 exam I read the Acted notes and studied from the text books (Hull & White and Baxter & Rennie). I guess that is all that helped me to a pass in ST6. There were quite good explanations on American Options (including the graphs they were looking for in the exam) as well as other info not contained in the Acted notes (which ended up in the exam). My personal feeling is that either Acted should bring their notes up to par or they should distribute the text books as study material.