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The Actuary The magazine of the Institute & Faculty of Actuaries

CT1 exam open to non-members

Non-members of the Profession will have the opportunity to take the CT1 (Financial Mathematics) exam for the first time in 2009. The exam will provide prospective actuaries and financial services staff with the opportunity to decide whether to pursue actuarial studies, to prove their skills to their employers, or to develop their numeracy skills.

The exam is the first in a series that students working towards becoming actuaries sit, and applicants will take the exam alongside trainee actuaries. The subject aims to provide a grounding in financial mathematics and its simple applications, teaching students skills including:
>> How to use a generalised cash flow model to describe financial transactions
>> How to take into account the time value of money using the concepts of compound interest and discounting
>> Defining and using important compound interest functions including annuities certain
>> How discounted cash flow techniques can be used in investment project appraisal
>> Describing the investment and risk characteristics of different types of asset available for investment purposes
>> Calculating the delivery price and value of a forward contract using arbitrage-free pricing methods
>> Demonstrating an understanding of the term structure of interest rates
>> Demonstrating an understanding of simple stochastic models for investment returns.

Head of learning Trevor Watkins said the exam would have a range of benefits for students, staff and their employers. “The new offering means that candidates don’t need to go through the process of becoming a member of the Faculty or the Institute of Actuaries to take the subject. “It gives those who work with actuaries the opportunity to improve their numeracy skills, or those who wish to become actuaries a chance to test their skills and investigate whether the area is right for them,” he said. “It could also help employers decide whether to support their staff members’ actuarial studies by establishing their strength in financial mathematics.”

Dr Watkins said employers who had been interviewed to determine demand for the subject had been supportive. “The employers we interviewed were supportive of the idea and we’ve also had a lot of questions from people who are interested in taking the exam.”

The exam will cost around £220 to enter and ActEd (www.acted.co.uk) study packs are available for £121. The exam will be held in April 2009 and the deadline for applying will be in February. The Profession has recommended that students should prepare for the exam from October. For more information, please visit test.actuaries.org.uk/students/exam_subjects