Solutions Manual Included!
This text is listed in the Course of Reading for the EA-1 Examination on the Joint Board for the Enrollment of Actuaries. It has also been adopted as the required text for introductory actuarial science courses at a number of colleges and universities. Students will also find this text to be valuable supplementary reading in preparing for SOA Exam FM.
In the twenty years since the third edition was published, significant changes have occurred in actuarial education to reflect the day-to-day work that actuaries are required to do. Many of these changes have their origin in the introduction of more complex products, especially those with embedded financial derivatives, the financial crises of 2007-2008, and the resulting regulatory responses. Today, actuaries regularly use more sophisticated software to model losses, perform simulations, and make economic projections. These changes have resulted in an increased reliance on technology and techniques that incorporate stochastic analysis, including simulation. These developments motivate some of the changes and additions made in the fourth edition.
One thing that has changed significantly in the last twenty years is that interest rates in all areas of financial life are much lower than they were before. As a consequence, most of the interest rates in the first few chapters of the text have been adjusted to better reflect current values. Except for these interest rate adjustments, and the addition of several new examples and exercises, Chapters 1 through 5 remain essentially unchanged.
There are more significant changes in Chapters 6 through 13. In many chapters, the original material is preserved from the third edition, and new information and insights have been added to modernize the content. Some of the chapters are broken into additional sections to make the material easier to follow. A new chapter on general insurance has been added. Most of the chapters include Extended Spreadsheet Exercises. These exercises provide the reader with a more in-depth experience solving problems in a spreadsheet environment. They allow the reader to see how examples and problems from the text can be extended to a more realistic setting. These problems include constructing actuarial table to a given life table, simulating life insurance benefits using the Gompertz model, extending examples beyond their pencil-and-paper analysis, and building a retirements analysis income worksheet.
For more detailed information about this textbook, click here for the Preface to the Fourth Edition.
About the Authors
Kevin L. Shirley, FSA
Kevin L. Shirley holds a Bachelor of Arts degree from Hendrix College in Conway, Arkansas and a Ph.D. in Mathematics from Vanderbilt University in Nashville, Tennessee. He is currently Professor of Mathematics at Appalachian State University and the Director of Actuarial Science, where he has taught mathematics and actuarial science for thirteen years. He is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. Prior to his role at Appalachian, he worked as a Life Pricing and Product Development Actuary for TransAmerica Worksite Marketing, in Little Rock, Arkansas, a subsidiary of AEGON N.V., as well as holding academic positions at Milligan College and Middle Tennessee State University.
Michael M. Parmenter, ASA
Michael M. Parmenter holds degrees from University of Toronto and University of Alberta. He is currently Professor Emeritus at Memorial University of Newfoundland, where he taught mathematics and actuarial science for thirty-nine years. He is the co-author of a textbook on discrete mathematics and graph theory.