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Life Pricing Exam Old Individual Life & Annuities Design and Pricing Forum

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  #21  
Old 10-04-2019, 04:09 PM
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Eddie Smith
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Originally Posted by TranceBrah View Post
i actually have no idea whats going on in obj 5. like we arent doing QFI track, why do I care about 14 tranche types in CMOs or why municipal bonds are risky.
I agree it will be interesting to see what actual exam questions based on Obj 5 end up looking like. My guess is that they will mostly be in some kind of ALM context, and that's how we've tried to structure most of our practice problems and practice exam questions as well as the quizzes in the lessons. ALM questions that mix asset and liability contexts have been a staple on other tracks like QFI and also much older exams dating back to the APM and even Course 6 days of the early 2000s. I expect LPM to continue that type of question.

I would make it a priority to think about the interest rate risk associated with each asset type and how that will mix with the interest rate risk inherent in common life and annuity products. For example, think about what it means for an insurer if interest rates go up/down when specific asset classes are used to back something like a deferred annuity. I think it's highly probable that you will see a question or two that requires you to explain the risk of different interest rate movements in those contexts.

Then again, they may just straight up test things in an "asset-only" context. There is certainly a ton of purely asset material that they could use for those questions.
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  #22  
Old 10-06-2019, 06:48 PM
mistersunnyd mistersunnyd is offline
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Does anyone have an estimate on what the average passing score (out of 100) for the Life Pricing exam is in the past?
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  #23  
Old 10-09-2019, 02:03 PM
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Does anyone have an estimate on what the average passing score (out of 100) for the Life Pricing exam is in the past?
55-65 depending on the difficulty level of the exam.
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  #24  
Old 10-22-2019, 06:44 PM
be the good guy be the good guy is offline
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How is everyone doing on objective 5? I feel like it is my weakest area. I am really nervous about all of the different asset classes. Some of them seem so complex.

Anyone else feel the same way?
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  #25  
Old 10-22-2019, 07:07 PM
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How is everyone doing on objective 5? I feel like it is my weakest area. I am really nervous about all of the different asset classes. Some of them seem so complex.

Anyone else feel the same way?
Same here. I get quite frustrated every time i read my own notes on Objective 5 lol. Like I can appreciate the asset allocation and ALM materials (immunization, cash flow matching etc.). but I don't know why I should care about repos and tranches.
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  #26  
Old 10-22-2019, 07:48 PM
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i pray to god everyday that the obj 5 questions are going to be portfolio and duration calculations. i also pray to not see building inc stat and BS for fwh modco and part-co.
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  #27  
Old 10-23-2019, 12:10 AM
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Same here. I get quite frustrated every time i read my own notes on Objective 5 lol. Like I can appreciate the asset allocation and ALM materials (immunization, cash flow matching etc.). but I don't know why I should care about repos and tranches.
One possible type of question related to all those various asset securities would be to recommend a security to purchase when you want to support certain liabilities, matching duration, and etc. This is a typical question when pricing for new products, especially in a low-interest-rate environment, how do you finance better return.
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  #28  
Old 10-23-2019, 11:21 AM
mistersunnyd mistersunnyd is offline
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I feel the same about section 5. Looking through the past QFI Core exams, I see lots of problems that give like 1 point but require you to write an entire paragraph as a response for full credit.
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  #29  
Old 10-23-2019, 11:29 AM
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One possible type of question related to all those various asset securities would be to recommend a security to purchase when you want to support certain liabilities, matching duration, and etc. This is a typical question when pricing for new products, especially in a low-interest-rate environment, how do you finance better return.


Most products covered in this syllabus are long duration contracts. I don't know what that means for what kinds of assets I should be investing in. Aren't companies investing practices quite varied in the industry? If I want a higher yield, am I not creating mismatches in my duration between assets and liabilities? I am confused as to how you balance all of these things.
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  #30  
Old 10-23-2019, 11:51 AM
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Sometimes when I read stuff on Obj 5, I get confused as to why such a considerable portion of the syllabus is dedicated to this. Like it's helpful to get to know the assets, but why it needs to be so in-depth?

After struggling with this crap for a few days, I really need to get back to calculating exposures to get my sanity back.
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