Actuarial Science CB1- An Introductory Brief
Actuaries quantify risk! For an actuary, ‘RISK IS AN OPPORTUNITY’. Actuaries look for risk and then try to find opportunities in it. In this article, we will look at the latest curriculum of actuarial science exam CB1.
The new curriculum is not ‘old wine in a new bottle’. Emphasis has shifted. Moreover, we will also learn how to apply software skills to these programs.
This paper is the successor of the CT2 Finance and Financial Reporting. The aim of this subject is to provide the basic understanding of corporate finance including knowledge of the instruments used by companies to raise finance and manage financial risk and to provide the ability to interpret the accounts and financial statements of companies and financial institutions. So, basically, we will be looking at the financial side of the business and the risk and gain associated with it.
Similarities Between CB1 and CT2
- The paper format remains the same. 3 hours 15 minutes written exam -20 marks ten multiple choice questions (IFOA & IAI) and rest 80 marks for subjective questions- 2 long questions of 20 marks each and 8 small questions of 5 marks each. (Not fixed for IAI though)
- No practical exam, only written knowledge tested.
- Most chapters of CT2 will be tested in the same manner in CB1 except for the following changes highlighted below –
Difference Between CB1 and CT2
- Chapter 1 extra portion added-Detailed description of shareholders wealth, problems related to it, social and divergent concerns, determinants of value and actions taken to influence them. (This was not tested in detail in CT2-so one extra portion to focus).
- Chapter 2 extra portion added-Additional methods of raising finance – ‘shadow banking’, ‘direct project financing’, ‘crowd-funding’ and ‘microfinance’.
- Chapter 3,4,5,6,15,16,17 and 18-No changes
- CT7 extra topics added in CB1- the relationship between growth and profitability, constraints on growth, mergers, and acquisitions.
- Chapter 14- Removed. No longer in CB1.
- Chapter 7-11-Alternatives to traditional financial reporting, the value of financial reporting on economic, social and environmental sustainability.
- Extra topics added-determination of working capital position, dividend sustainability, the purpose of forecasting and budgeting along with examples, key principles of corporate governance and regulation of companies, the purpose of regulating the financial reporting information of incorporated entities.
There is a saying ‘Change is the only thing that is permanent’, so don’t be scared of it. Adapt yourselves accordingly. There are a few things to keep in mind while studying for CB1:
Make your study plan and consistently follow it, locate your weaker sections, the sections on which you have to put more emphasis. So plan your schedule, trust yourself, and make sure that you understand each and every concept.
Consider yourself as an actuary and think as one while studying. Be flexible with your concepts and approaches while studying the case scenarios and think what an actuary would do in this situation. Even if you are wrong, don’t panic, just understand the answer and rethink for the next question. For students from science and arts background, don’t be afraid to study a completely different subject. And don’t think that a student from a commerce background has an edge over you.
Not having any prior knowledge doesn’t mean that it is going to be tough for you. So there is nothing to worry about because at the end it is the hard work, your effort and conceptual understanding that matters the most for students of all streams be it science, commerce or arts.
So Keep Calm And Stay Focus!