Texts ?C Financial Economics Segment

　　• Derivatives Markets (Second Edition), 2006, by McDonald, R.L., Chapter 9-14 (excluding appendices), Chapter 20 through “Functions of an Itô Process”, Chapter 24.

　　Study Notes  - Financial Economics Segment

　　SNs for the Preliminary Education examinations are available on the SOA Web site under Exams and Jobs/Candidate and Exam Information/Spring Exam Session/Spring 2007 Basic Education Catalog ?C Study Notes Information.  Hard copies may be purchased by using the Study Note and Published Reference order form in the back of the printed catalog or by downloading the form from the Spring Exam Session Web page.

　　Code   Title
　　MFE-11-07# Exam MLC Introductory Study Note
　　MFE-09-06# Exam MLC Sample Questions and Solutions
　　MFE-26-07# Actuarial Applications of Financial Economics

　　Exam C  Construction and Evaluation of Actuarial Models

　　The examination for this material consists of four hours of multiple-choice questions and is identical to CAS Exam 4.
　　This material provides an introduction to modeling and covers important actuarial methods that are useful in modeling.  A thorough knowledge of calculus, probability and mathematical statistics is assumed.
　　The candidate will be introduced to useful frequency and severity models beyond those covered in Exam M.  The candidate will be required to understand the steps involved in the modeling process and how to carry out these steps in solving business problems.  The candidate should be able to:  1) analyze data from an application in a business context; 2) determine a suitable model including parameter values; and 3) provide measures of confidence for decisions based upon the model.  The candidate will be introduced to a variety of tools for the calibration and evaluation of the models.
　　A variety of tables will be provided to the candidate in the study note package and at the examination.  These include values for the standard normal distribution, chi-square distribution, and abridged inventories of discrete and continuous probability distributions.  These tables are also available on the SOA and CAS Web sites.  Since they will be included with the examination, candidates will not be allowed to bring copies of the tables into the examination room.