ACTUARY

The path to become an actuary involves going through a well-structured education plan. This involves university-level education and professional examinations, as well as other requirements.

This is a correction issued for a mistake in the solution for Problem ESQBSF5 in The Actuary's Free Study Guide for Exam 3F / Exam MFE.

Mr. Stolyarov corrects a formula that was inaccurately presented in Section 19 of The Actuary's Free Study Guide for Exam 3F / Exam MFE. He also gives revised versions of the solutions affected by the correction.

Become an Actuary? What the heck is an actuary? That's what I first said when I heard that job title. Little did I know that being an actuary has been consecutively ranked as one of the best jobs in United States by the Jobs Rated Almanac.

Actuaries seeking career advancement should consider the process of professional certification. Actuarial certification can be achieved by getting qualified and passing various actuarial-science certification exams with the Society of Actuaries.

When I finished this list, I honestly didn't know whether to laugh or scream in frustration. None of these jobs are ideal. Many people work them as an in-between job until they have money to go to college or maybe, because they actually like it.

Section 32 of The Actuary's Free Study Guide for Exam 3F / Exam MFE provides a comprehensive review of binomial option pricing and put-call parity by offering five exam-style questions and solutions that apply the concepts.

Section 31 of The Actuary's Free Study Guide for Exam 3F / Exam MFE gives 5 practice problems and solutions regarding Schroder's method for constructing binomial stock price trees when the stock pays discrete dividends.

Section 30 of The Actuary's Free Study Guide for Exam 3F / Exam MFE discusses alternative approaches to constructing binomial trees - including the Cox-Rubinstein binomial tree and the lognormal tree. 5 practice problems and solutions are given.

Section 29 of The Actuary's Free Study Guide for Exam 3F / Exam MFE discusses the relationships among standard deviations of returns on an asset for various periods of time, as well as a formula for obtaining probabilities at any node of a multi-period binomial tree.

Section 28 of The Actuary's Free Study Guide for Exam 3F / Exam MFE explains the random walk model for coin flips and how the random walk model can be applied to stock prices by adding assumptions about continuously compounded returns.

Section 27 of The Actuary's Free Study Guide for Exam 3F / Exam MFE explains how to use the binomial model to price European call options using true probabilities of changes in the underlying stock price.

Section 26 of The Actuary's Free Study Guide for Exam 3F / Exam MFE explores how treatment of the risk-neutral probability of an upward movement in stock prices compares with treatment of the true probability of such a movement.

Section 25 of The Actuary's Free Study Guide for Exam 3F / Exam MFE discusses the conditions under which early exercise for American call and put options is or is not optimal - depending on stock price, strike price, interest rate, dividends, and volatility.

Section 24 of The Actuary's Free Study Guide for Exam 3F / Exam MFE presents four additional practice problems on binomial option pricing of the kind and difficulty that are likely to appear on the actuarial exam.

Section 23 of The Actuary's Free Study Guide for Exam 3F / Exam MFE presents five practice questions similar to the ones likely to appear on the actuarial exam. Solutions are provided as well.

Section 22 of The Actuary's Free Study Guide for Exam 3F / Exam MFE gives formulas and practice problems and solutions for finding the prices of options on futures contracts using the binomial model.

Section 21 of The Actuary's Free Study Guide for Exam 3F / Exam MFE gives 5 practice problems and solutions for how to apply the binomial option pricing model to options on currencies.

Section 20 of The Actuary's Free Study Guide for Exam 3F / Exam MFE discusses how to use the binomial option pricing model to determine the prices of American call and put options. 5 sample problems and solutions are provided.

Section 19 of The Actuary's Free Study Guide for Exam 3F / Exam MFE discusses an approach toward binomial option pricing of put options and presents 5 original practice problems and solutions. As a special bonus, an extremely useful time-saving formula is introduced.

Section 18 of The Actuary's Free Study Guide for Exam 3F / Exam MFE explores approaches to the binomial option pricing model involving multiple periods. Five practice problems and solutions are included.

Section 17 of The Actuary's Free Study Guide for Exam 3F / Exam MFE explores a method of constructing binomial trees in the one-period binomial option pricing model. It includes 5 practice problems and solutions

Section 16 of The Actuary's Free Study Guide for Exam 3F / Exam MFE gives formulas and practice problems for the risk-neutral probability of an increase in the stock price within the one-period binomial option pricing model.

In Section 12 of The Actuary's Free Study Guide for Exam 3F / Exam MFE, the concept of strike price convexity is discussed and sample problems and solutions are presented.

This section of The Actuary's Free Study Guide for Exam 3F / Exam MFE describes the various relationships among prices of options with different strike prices. 5 practice problems and solutions are included.

This section of The Actuary's Free Study Guide for Exam 3F / Exam MFE discusses how time to expiration affects the prices of European and American call and put options. Five practice problems and solutions are provided.

This section of The Actuary's Free Study Guide for Exam 3F / Exam MFE discusses when it is never optimal to exercise American put and call options early and when such exercise might be optimal. Practice problems and solutions are provided.

This section of The Actuary's Free Study Guide for Exam 3F / Exam MFE discusses the boundaries and constraints on prices of American and European call options and presents five original problems and solutions on this topic.

Mr. Stolyarov discusses the formula for parity of options on bonds and presents five original practice problems and solutions in this 5th section of The Actuary's Free Study Guide for Exam 3F / Exam MFE.