Is FM easier than P?

[kubila]

I heard from somewhere (dont remember where right now) that Exam FM is easier than Exam P. Is this true? Anybody who has taken FM before?:skeptical:

[jonny]

I'm just starting to study for FM, but from what I've gathered so far, the FM syllabus does not look as expansive and overwhelming as the P syllabus. FM looks a little more focused on a particular topic, whereas P was much more all over the place.

So with that said, I think that FM will be easier...at least that's what I'm hoping. I had a heck of a time getting past P :)

Good luck in your studies.

[Fermat83]

I heard from somewhere (dont remember where right now) that Exam FM is easier than Exam P. Is this true? Anybody who has taken FM before?:skeptical:

The short answer yes. For P the problem solving and trickyness of the exam is harder than FM. Many students who I am taking an FM course with heard that FM was very easy and as a result are struglling with the material because they took it lightly. The whole thing with FM is you must master the concepts of time value of money(present value, future value) and annuities and equations of value, conceptually these are the most difficult part of the exam, you must not memorize but understand these concepts and visualize whats going on in a fund . I spent a decent amount of time on these concepts and one day it just all clicked as soon as that happened the entire course becomes rediculously easy. After that its just repitition and some formula memorizing. I spent 70 hrs over the summer studying FM and covered 80% of the material.

[kubila]

Got it. Thank you both. I think i'll take it as seriously as the P.

[jthias]

I heard from somewhere (dont remember where right now) that Exam FM is easier than Exam P. Is this true? Anybody who has taken FM before?:skeptical:

I'll let you know in a month which is easier :D

Kidding aside, most that have taken both have said FM is easier.

[(/iropracy]

I haven't taken it yet, but through practicing it seems easier.

In my opinion, FM is more about knowing the trick, or the procedure right away. Exam P was all about being quick and accurate with calculus. FM is all about being tricky with your algebra and maximizing the CF and TVM worksheets to their fullest.

Also in FM, it seems I always have some formula to start with, rather than constructing an integral, a pdf, mgf, or whatever else like in P.

[jthias]

I haven't taken it yet, but through practicing it seems easier.

In my opinion, FM is more about knowing the trick, or the procedure right away. Exam P was all about being quick and accurate with calculus. FM is all about being tricky with your algebra and maximizing the CF and TVM worksheets to their fullest.

Also in FM, it seems I always have some formula to start with, rather than constructing an integral, a pdf, mgf, or whatever else like in P.

I know the TVM keys well. I was just curious how useful you find (or anyone else in this forum) the other feature that you mentioned like CF, IRR and interest rate conversions keys? Most of the examples and solutions involving the BAII in the ASM rely on TVM keys, so I really haven't given the other features much consideration or usage. Are the others as worth learning as the TVM keys in terms of cutting down on calculation times?

[(/iropracy]

I know the TVM keys well. I was just curious how useful you find (or anyone else in this forum) the other feature that you mentioned like CF, IRR and interest rate conversions keys? Most of the examples and solutions involving the BAII in the ASM rely on TVM keys, so I really haven't given the other features much consideration or usage. Are the others as worth learning as the TVM keys in terms of cutting down on calculation times?

Oh so you don't know how you can solve basically any polynomial with the CF worksheet?

Try this:

Say you are trying to solve 1-v-v^10=0

Go to the cash flow worksheet and put in the following:

C0=1
C1=-1
F1=1
C2=0
F2=9 (the time between cash flow one and cash flow 10)
C3=-1
F3=1

Hit IRR and then CPT. What you get is an answer for i. That was an easy one. Here is another example.

20(1+i/4)^28-10(1+i/4)^20-10(1+i/4)^16-5=0

We can either put the cash flows in directly or multiply through by v^28. Just put them in directly.

C0=20 (Cash flow at t=0 accumulates the longest.)
C1=0
F1=7 (28-(20+1), the time between cash flow 0 and 1)
C2=-10
F2=1
C3=0
F3=3
C4=-10
F4=1
C5=0
F5=15
C6=-5
F6=1

IRR --> CPT = 1.7103%

What we solved for here was i/4. Then i = 4* 1.7103% = 6.8411% (This is the nominal convertible quarterly)

This comes in handy a lot of ways. Note that if you get IRR=0, then you need to solve it some other way. This happens now and again.

Let's say you have the polynomial 3x^2+2x-1=0. You treat x as v.

C0=-1
C1=2
F1=1
C2=3
F2=1

CPT IRR = 200 remember this is i.

If we want x we have the identity x=1/(1+i). Since i = 200%, x= 1/3. We can find a root for basically any degree polynomial.

Hope that sheds some light.

[djerry81]

It seems to me FM is harder because I never learned this stuff and the tricks on the problems don't come naturally to me. I'm struggling now and I am using ASM and TIA. I'm not sure if the problems are just ridiculously hard or I am just unprepared. The simple ones using the calculator I have no problem doing, the ones that require some series expansion or turning payments into series I am struggling with. Lets not talk about derivatives or amort

[alekhine4149]

I found FM/2 harder than P/1 and got a lower passing grade. Each person has a different style, but I read a poll somewhere on this site in which the majority feel P/1 is harder so I'm in the minority here.

Also it depends on your background. I had plenty of calculus and statistics background, but no finance. So present value was very alien to me and took a while to absorb.

P/1 problems more interesting to me also, and rewarded attention even when they were tough. FM/2 is kind of dry.

[dmbfan41]

i really don't know yet (although i'm essentially done the material). it seems to me that the memorization for FM is a lot easier than for P.

[jthias]

Oh so you don't know how you can solve basically any polynomial with the CF worksheet?

Try this:

Say you are trying to solve 1-v-v^10=0

Go to the cash flow worksheet and put in the following:

C0=1
C1=-1
F1=1
C2=0
F2=9 (the time between cash flow one and cash flow 10)
C3=-1
F3=1

Hit IRR and then CPT. What you get is an answer for i. That was an easy one. Here is another example.

20(1+i/4)^28-10(1+i/4)^20-10(1+i/4)^16-5=0

We can either put the cash flows in directly or multiply through by v^28. Just put them in directly.

C0=20 (Cash flow at t=0 accumulates the longest.)
C1=0
F1=7 (28-(20+1), the time between cash flow 0 and 1)
C2=-10
F2=1
C3=0
F3=3
C4=-10
F4=1
C5=0
F5=15
C6=-5
F6=1

IRR --> CPT = 1.7103%

What we solved for here was i/4. Then i = 4* 1.7103% = 6.8411% (This is the nominal convertible quarterly)

This comes in handy a lot of ways. Note that if you get IRR=0, then you need to solve it some other way. This happens now and again.

Let's say you have the polynomial 3x^2+2x-1=0. You treat x as v.

C0=-1
C1=2
F1=1
C2=3
F2=1

CPT IRR = 200 remember this is i.

If we want x we have the identity x=1/(1+i). Since i = 200%, x= 1/3. We can find a root for basically any degree polynomial.

Hope that sheds some light.


Useful stuff. Although the second example took me a little while to get used to. I've been doing these problems so far the old fashioned way ;) - by applying the quadratic formula. Once I have the quadratic equation I just punch in b^2 - ( 4 * a * c ) then take square root and subtract b / ( 2 * a ) where all the symbols and operations in the expression have corresponding keys on the calculator, but mine only works for quadratic equations. I think I've occasionally encountered non-quadratic polynomials in the problems, but I've been using trial-and-error to solve those, so now I've got something new in my "arsenal" for those types of problems. Thanks! I also get how to use the NPV key now.

[Akki]

I think this link might help you.
http://www.actuary.com/actuarial-discussion-forum/showthread.php?t=5459

[(/iropracy]

Useful stuff. Although the second example took me a little while to get used to. I've been doing these problems so far the old fashioned way ;) - by applying the quadratic formula. Once I have the quadratic equation I just punch in b^2 - ( 4 * a * c ) then take square root and subtract b / ( 2 * a ) where all the symbols and operations in the expression have corresponding keys on the calculator, but mine only works for quadratic equations. I think I've occasionally encountered non-quadratic polynomials in the problems, but I've been using trial-and-error to solve those, so now I've got something new in my "arsenal" for those types of problems. Thanks! I also get how to use the NPV key now.

What is messed up about this exam is that one way could be quicker than another. For instance if you get IRR=0 then you just wasted your time. If you rely to much on way to solve things it can hurt you. Be careful not to get stuck using it all the time.

I also just found the bond worksheet on the BA-II Plus. Only useful for one purpose though (so far that I know). Problems like this:

You buy a 1000 par value with 4% coupons paid annually, at a yield of 6% on Oct. 15, 2002. The bond matures at par on Jan. 26, 2009. What is the price?

Anyway, sorry for making this thread something other than the subject at hand.