Society of Actuaries Advanced Long-Term
Actuarial Mathematics (ALTAM) Practice Test
Exam
1. Which of the following best describes the purpose of the
ALTAM exam?
A) To test short-term insurance models
B) To assess knowledge of contingent payment models and their
application to insurance and other financial risk
C) To certify enterprise risk management skills
D) To evaluate investment portfolio management
Correct Answer: B
Rationale: The ALTAM exam assesses candidates' knowledge of
contingent payment models and how they apply to insurance
and other financial risk, building on the FAM exam material .
2. What is the format of the ALTAM exam?
,A) Multiple choice only
B) A three-hour exam consisting of six questions worth a total of
60 points
C) A five-hour project-based assessment
D) A computer-adaptive test
Correct Answer: B
Rationale: The ALTAM exam is a three-hour written-answer
exam consisting of six questions worth a total of 60 points. One
question is answered in Excel .
3. Which exam material is assumed knowledge for ALTAM?
A) Only FM
B) FM, P, and FAM exams, and Mathematical Statistics VEE
material
C) Only P and FM
D) No prior exams are assumed
Correct Answer: B
,Rationale: Knowledge of the FM, P, and FAM exams, and the
Mathematical Statistics VEE material is assumed for the ALTAM
Exam .
4. In a Markov multiple-state model, what do Kolmogorov's
forward differential equations describe?
A) The rate of change of transition probabilities over time
B) The present value of future benefits
C) The premium loading
D) The reserve at policy inception
Correct Answer: A
Rationale: Kolmogorov's forward equations describe the rate of
change of the probability of being in a particular state at time t,
based on transition intensities between states .
5. For a multiple-state model with states 0, 1, 2, and 3, what is
the boundary condition for \( P_{x}^{10} \) at time 0?
A) \( P_{x}^{10} = 1 \)
, B) \( P_{x}^{10} = 0 \)
C) \( P_{x}^{10} = \mu_{x}^{10} \)
D) \( P_{x}^{10} = \infty \)
Correct Answer: B
Rationale: The boundary condition for \( P_{x}^{10} \) at time 0
is 0, because a life cannot start in state 1 and be in state 0 at the
same instant. The boundary condition for \( P_{x}^{11} \) is 1 .
6. What does the Chapman-Kolmogorov equation allow you to
calculate?
A) Continuous transition intensities
B) Discrete time transition probabilities in a Markov model
C) Premiums
D) Policy reserves
Correct Answer: B
Actuarial Mathematics (ALTAM) Practice Test
Exam
1. Which of the following best describes the purpose of the
ALTAM exam?
A) To test short-term insurance models
B) To assess knowledge of contingent payment models and their
application to insurance and other financial risk
C) To certify enterprise risk management skills
D) To evaluate investment portfolio management
Correct Answer: B
Rationale: The ALTAM exam assesses candidates' knowledge of
contingent payment models and how they apply to insurance
and other financial risk, building on the FAM exam material .
2. What is the format of the ALTAM exam?
,A) Multiple choice only
B) A three-hour exam consisting of six questions worth a total of
60 points
C) A five-hour project-based assessment
D) A computer-adaptive test
Correct Answer: B
Rationale: The ALTAM exam is a three-hour written-answer
exam consisting of six questions worth a total of 60 points. One
question is answered in Excel .
3. Which exam material is assumed knowledge for ALTAM?
A) Only FM
B) FM, P, and FAM exams, and Mathematical Statistics VEE
material
C) Only P and FM
D) No prior exams are assumed
Correct Answer: B
,Rationale: Knowledge of the FM, P, and FAM exams, and the
Mathematical Statistics VEE material is assumed for the ALTAM
Exam .
4. In a Markov multiple-state model, what do Kolmogorov's
forward differential equations describe?
A) The rate of change of transition probabilities over time
B) The present value of future benefits
C) The premium loading
D) The reserve at policy inception
Correct Answer: A
Rationale: Kolmogorov's forward equations describe the rate of
change of the probability of being in a particular state at time t,
based on transition intensities between states .
5. For a multiple-state model with states 0, 1, 2, and 3, what is
the boundary condition for \( P_{x}^{10} \) at time 0?
A) \( P_{x}^{10} = 1 \)
, B) \( P_{x}^{10} = 0 \)
C) \( P_{x}^{10} = \mu_{x}^{10} \)
D) \( P_{x}^{10} = \infty \)
Correct Answer: B
Rationale: The boundary condition for \( P_{x}^{10} \) at time 0
is 0, because a life cannot start in state 1 and be in state 0 at the
same instant. The boundary condition for \( P_{x}^{11} \) is 1 .
6. What does the Chapman-Kolmogorov equation allow you to
calculate?
A) Continuous transition intensities
B) Discrete time transition probabilities in a Markov model
C) Premiums
D) Policy reserves
Correct Answer: B
