Good Luck Everyone!

[drparliament]

For everyone taking FM in December 2009, good luck! :smiloe:

[KHC831]

Lets do this!!!!

[Dance!]

the computer said i passed. so i guess i passed! :)

[recession]

ok, so deleting the message..

[sohpmalvin]

All the best!

[Kenneth]

Good plan!

[youngsoo86]

Let's do this!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[jamesy628]

6 more days!!!!

[dcollins6]

Dance what study manual did you use, was this your first time taking it, and did you have any prior experience with FM material like a theory of interest class?

[Kenneth]

1234567890 this is not a post 0987654321

[youngsoo86]

I will be taking the exam on Saturday, and I want to postpone it!
I am so scarrrrrrred.
10 hours per day (Thurs & Fri.) x 2 = 20 hours can make a difference!!!!!!!!! (Hopefully)

GL Everyone.

[drparliament]

So what did Recession write and then delete? Hmmm.

Anyway, I passed today and found the test easier than expected. Yes, I know it used to be a lot harder and it got dumbed down. That's the nature of things.

Again, good luck everyone! (even though you won't need it.)

[Dance!]

Dance what study manual did you use, was this your first time taking it, and did you have any prior experience with FM material like a theory of interest class?it's so cute how i'm getting all these questions about every single detail about the exam! i should throw in my height and weight too just incase it has any relevance to passing! heheh :wink:

joking aside, i exclusively used the 8th edition of the asm manual and found it to be spot on, except for the financial economics part which i found to be lacking in detail and difficulty. it is an old edition so hopefully they've revised it since then. i passed the exam on my first try, and yes i did take a compound interest course in university but it was nothing compared to the level of difficulty than even the simplest problems on the exam.

good luck to all of you!

[rawrster]

heh..took it today and passed as well :]

i did find it easier than i expected it to be but thats cuz i studied a lot and the asm manual was supposed to be harder than the exam

[recession]

So what did Recession write and then delete? Hmmm.

Anyway, I passed today and found the test easier than expected. Yes, I know it used to be a lot harder and it got dumbed down. That's the nature of things.

Again, good luck everyone! (even though you won't need it.)

asked something which kenneth said that must not be answered. so i deleted . Good to know that the papers were on the easier side.

[sohpmalvin]

If you guys need any help for the exam, do feel free to send me a PM!

[thodges314]

I did it! I bloody well did it, and in only 2 out of the 3 hours allotted! I spent the first hour on the ones I could get right away, and for the second hour I paged through the incomplete and tagged problems and solved them as I thought of solution methods. I had to get pretty creative in finding a few of the solutions, and in only one I straight out guessed.
Now a brief hiatus to relax, do a number of things I have been postponing because studying for the exam was of greater importance (like cleaning my pad, which is a royal mess), and then on to preparing for the next exam.

[KHC831]

I PASSED~~~~!!!! :laugh:
Good luck to the rest of you taking the exam!!

[skylark]

If you guys need any help for the exam, do feel free to send me a PM!
In that case, here's a question for you.

This is Q11 from SOA's DM sample questions
The current stock price is 40, and the effective annual interest rate is 8%.The price of a
35-strike 1-year European call option is 9.12. The price of a 40-strike 1-year European
call option is 6.22.The price of a 45-strike 1-year European call option is 4.08.
Assuming that all call positions being compared are long, at what 1-year stock price
range does the 45-strike call produce a higher profit than the 40-strike call, but a lower
profit than the 35-strike call?
A. S1 < 38.13
B. 38.13 < S1 < 40.44
C. 40.44 < S1 < 42.31
D. S1 > 42.31
E. There is no price for S1 at which this situation occurs.

I am OK with calculation of profits at various spot price. I don't understand the cutoff points in the solution .

Solution can be found at
http://www.soa.org/files/pdf/edu-2009-fall-exam-fm-sol.pdf

Please help. I have 2 more days to go.

Thanks at lot,
skylark

[RabidAltruism]

Skylark,

I was looking at the same question earlier today; I also thought the cut-off values were a bit strange at first, my initial reaction being something to the effect of: "Shouldn't the critical points here be 35, 40, or 45 - the points where the options each take effect?"

If you look at McDonald's graph of a strangle versus a straddle, though, it's clear that we're looking for the points where the strangle and straddle cross, and that there should be two such points - one in the region 35 < x < 40, the other in the region 40 < x < 45. If you write out the profit equations for the strangle and straddle explicitly, set them equal to one another, and solve for the implied values of x in each of these regions, you get the cut-off points indicated in the SOA DM sample question's solution.

It's not especially intuitive, but iirc, I think it's the differences in the premium values for each of the three options involved that combine to give "weird," not-quite-natural cross-over points between the straddle and strangle profit functions.

[KHC831]

Skylark,

I was looking at the same question earlier today; I also thought the cut-off values were a bit strange at first, my initial reaction being something to the effect of: "Shouldn't the critical points here be 35, 40, or 45 - the points where the options each take effect?"

If you look at McDonald's graph of a strangle versus a straddle, though, it's clear that we're looking for the points where the strangle and straddle cross, and that there should be two such points - one in the region 35 < x < 40, the other in the region 40 < x < 45. If you write out the profit equations for the strangle and straddle explicitly, set them equal to one another, and solve for the implied values of x in each of these regions, you get the cut-off points indicated in the SOA DM sample question's solution.

It's not especially intuitive, but iirc, I think it's the differences in the premium values for each of the three options involved that combine to give "weird," not-quite-natural cross-over points between the straddle and strangle profit functions.

I think you gotta take into account the prices of puts and calls one year from now.

[youngsoo86]

I will be taking the exam on Saturday, and I want to postpone it!
I am so scarrrrrrred.
10 hours per day (Thurs & Fri.) x 2 = 20 hours can make a difference!!!!!!!!! (Hopefully)

GL Everyone.


====================================

WHOOOHOOOO I took it 5 min ago, and I PASSED! YAY!

I thought I failed because it was pretty difficult for me
but I passed anyway.


I hope to see you all again at MLC

[sohpmalvin]

I have uploaded an alternative solution. That might be helpful in understanding the cut-off values.

[RabidAltruism]

I think you gotta take into account the prices of puts and calls one year from now.

Yes, I agree. The premiums I mentioned must first be converted to future values.

[Jimbo]

I passed the exam yesterday!

I found the test to be quite difficult--much more so than I expected. I worked continuously the full three hours, which rarely happened during my practice exams.

Making a candidate fill out the survey before showing the pass/fail result is a form of torture. I had a huge knot in my stomach, but then I felt the weight of the world lift away as the "congratulations" message appeared on my screen.

For those who have passed already, congratulations. For those taking the test in the coming days, good luck. :)

[skylark]

Thank you so much RabidAltruism and Sohpmalvin !!! That helped tremendously !