IFoA CM1 study guide
IFoA CM1 · Work through your exam, one topic at a time.
CM1 (Actuarial Mathematics) is one of the Core Principles subjects in the Institute and Faculty of Actuaries (IFoA) qualification pathway. It is aimed at candidates working toward Associate or Fellowship status, and it is usually taken after the earlier Core Principles subjects and alongside or before the more modelling-heavy later subjects. The IFoA CM1 study guide has 8 sections and about 2,394 words.
01Theory of Interest Rates: Accumulation, Discounting, Annuities and Equations of Value
This domain tests whether you can move cashflows through time consistently and solve equations of value. Core tools are the effective rate i, discount factor v=1/(1+i), nominal rates convertible m times per year, and force of interest δ=ln(1+i).
282 words, about 1 min02Term Structures of Interest Rates and Simple Stochastic Asset Return Models
This domain tests spot rates, forward rates, discount factors and simple models for asset returns. A spot rate y t is the annual effective rate for a zero-coupon cashflow at time t, with discount factor P(0,t)=(1+y t)^-t.
306 words, about 2 min03Principles of Actuarial Mathematics: Cashflow Models, Survival and Present-Value Random Variables
This domain tests how actuaries model uncertain cashflows and value them. A survival model uses a future lifetime random variable T x for a life aged x, with survival probability t p x=P(T x t) and density f T(t)=t p x μ {x+t}.
330 words, about 2 min04Life Tables and Life Insurance and Annuity Contracts
This domain tests assurance benefits, annuity benefits, premiums and reserves using life tables. From l x, d x=l x-l {x+1}, p x=l {x+1}/l x and q x=d x/l x.
304 words, about 2 min05Mortality and Morbidity Models: Laws, Selection and Multiple Decrements
This domain tests parametric mortality laws, selection and multi-state or multiple-decrement models. Gompertz law sets μ x=Bc^x, giving exponentially increasing mortality.
275 words, about 1 min06Profit Testing and Analysis of Surplus for Life Insurance Contracts
This domain tests whether a contract is profitable after allowing for premiums, claims, expenses, reserves, interest and risk discount. A profit test projects cashflows by duration.
312 words, about 2 min07Reserving, Capital and Solvency for Life Insurance Business
This domain tests the difference between reserves, technical provisions and capital. A reserve is held for expected future obligations under a contract.
287 words, about 1 min08Pension and Social Security Schemes: Benefits, Funding and Actuarial Modelling
This domain tests benefit structures, funding and modelling for occupational and social security schemes. A defined-benefit scheme promises a formula-based pension, often using accrual rate times pensionable service times final or average salary.
298 words, about 1 min