Actuarial Science: CT8 vs CM2 – A Comparison

In the words of Winston Churchill, “To improve is to change, to be perfect is to change often.”

With the same impression in mind, the IFoA has made a drastic change in its curriculum- Making the students’ industry ready at the time when they are preparing for their exams. The institute has introduced the practical application of the theoretically learned concepts.

While we have already welcomed the 2019 curriculum there is still a lot of skepticism regarding the changes in the course structure, time to be devoted for the preparation and the most important of all- the online test.

Let me take this opportunity to clear your doubts on the subject CT8. CT8 which was named as Financial Economics has now been replaced with CM2 – Loss Reserving and Financial Engineering.

Aim of the subject
The aim remains the same i.e. to provide a grounding in the principles of modeling as applied to actuarial work – focusing particularly on stochastic asset liability models and the valuation of financial derivatives.

Exam Structure
The examination pattern has changed. Along with the conventional pen-paper test of 3 hours and 15 minutes (CM2A) one also has to appear for an online test of 1 hour and 45 minutes (CM2B). For CM2B one has to learn Advance Excel.

Fee Structure
The standard examination fee for CT8 was £225 and for CM2 is £280. However, the reduced fee for CM2 is £165, while it was £120 for CT papers.

Under the revised curriculum, topics from CT6 such as Ruin Theory and Run Off Triangles are added. The weight of each unit is given below:

1. Theories of financial market behavior (15%).
2.  Measures of investment risk (15%).
3. Stochastic investment return models (10%).
4. Asset valuations (20%).
5. Liability valuations (20%).
6. Option theory (20%).

Study Hours
The recommended study hours for CT8 were 125-150 hours. The number of study hours for CM2 has increased to 250 hours, due to the computer-based exam and inclusion of a few new topics.

For the computer-based exam, it is advisable to learn the shortcuts and practice a lot so that one is handy in using the software during the exam.

Evaluation Pattern
There is a complete change in the method of evaluation. Earlier CT8 was a 100 marks theoretical exam. Now CM2 will be evaluated at 2 levels: a theory paper (CM2A) of 100 marks and a computer-based exam (CM2B) of 100 marks to be done using Excel. CM2A will be weighted at 70% and CM2B at 30%.

If your combined score is above the passing mark for that diet, you’ll clear the exam, otherwise, you will have to reappear for both the papers.

As rightly said by Charles Darwin,” It is not the strongest or the most intelligent who will survive but those who can best manage change”.

Hence, get ready, embrace the change, prepare heartedly, put all your efforts and ace your exams.

Happy Studying.

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