SOA EXAM FAM FORMULAS THAT I
FREQUENTLY FORGET QUESTIONS
AND ANSWERS
Permissible Loss Ratio - Correct Answers -1 - V - Qt where V is variable expenses and
Qt is target profit and contingencies ratio
Indicated Average Rate Change: Loss Ratio Method - Correct Answers -(LR + F)/ (1 - V
- Qt) - 1
Indicated Average Rate Change: Loss Cost Method - Correct Answers -(L + Ef) / (1 - V -
Qt)
Call Option Payoff - Correct Answers -max(St - K, 0)
d2(t) in Black-Scholes-Merton Formula - Correct Answers -d1(t) - (volatility)sqrt(T-t)
Black-Scholes-Merton Formula (Put Option) - Correct Answers -p(t)=Ke^(-r(T-t))(phi(-
d2(t)) - (St)phi(-d1(t))
Cumulative Hazard Function H(x) - Correct Answers --ln(S(x))
Put Option Payoff - Correct Answers -max(K - St, 0)
Put-Call Parity - Correct Answers -c(t) - p(t) = St - Ke^(-r(T-t))
Black-Scholes-Merton Formula (Call Option) - Correct Answers -c(t) = (St)phi(d1(t)) -
(Ke^(-r(T-t)))phi(d2(t))
d1(t) in Black-Scholes-Merton Formula - Correct Answers -[ln(St/K) + (r +
0.5(volatility^2))(T-t)] / [(volatility)sqrt(T-t)]
Hazard Function h(x) - Correct Answers -f(x) / S(x) or derivative of H(x)
FREQUENTLY FORGET QUESTIONS
AND ANSWERS
Permissible Loss Ratio - Correct Answers -1 - V - Qt where V is variable expenses and
Qt is target profit and contingencies ratio
Indicated Average Rate Change: Loss Ratio Method - Correct Answers -(LR + F)/ (1 - V
- Qt) - 1
Indicated Average Rate Change: Loss Cost Method - Correct Answers -(L + Ef) / (1 - V -
Qt)
Call Option Payoff - Correct Answers -max(St - K, 0)
d2(t) in Black-Scholes-Merton Formula - Correct Answers -d1(t) - (volatility)sqrt(T-t)
Black-Scholes-Merton Formula (Put Option) - Correct Answers -p(t)=Ke^(-r(T-t))(phi(-
d2(t)) - (St)phi(-d1(t))
Cumulative Hazard Function H(x) - Correct Answers --ln(S(x))
Put Option Payoff - Correct Answers -max(K - St, 0)
Put-Call Parity - Correct Answers -c(t) - p(t) = St - Ke^(-r(T-t))
Black-Scholes-Merton Formula (Call Option) - Correct Answers -c(t) = (St)phi(d1(t)) -
(Ke^(-r(T-t)))phi(d2(t))
d1(t) in Black-Scholes-Merton Formula - Correct Answers -[ln(St/K) + (r +
0.5(volatility^2))(T-t)] / [(volatility)sqrt(T-t)]
Hazard Function h(x) - Correct Answers -f(x) / S(x) or derivative of H(x)