Tuesday, February 28, 2006

11 of 14


Not much done today. Attempted the "Hot Yoga" again that killed my wife and I on Sunday. I did better, but I seemed to have gained weight. This entire weight issue perplexes me.

Have been working Exam P problems for at least a couple of hours today. Today, I gave myself a "mini-Exam P" -- 14 problems in one hour. (Exam P is 40 problems in 3 hours). My final score was 11 of 14, or about 78 percent, which (hopefully) would be a pass. I'll look over what I did wrong in the near future.

As it turns out, the most recent Exam P available from SOA is from 2003. I wonder why they keep those old Exam P copies hidden -- no copies of Exam P for at least 2 years.
Maybe Exam P is just so powerful, so deadly, that if multiple copies of Exam P were available, its awesome power could rule the world! Or maybe, they're just in cahoots to sell more ACTEX manuals....

Monday, February 27, 2006

Reinsurance and Modeling


Right now, I'm currently typing between classes. Finished with Dr. N's Probability I class and Dr. S's class.

As for Dr. N., I get the suspicion that a lot of people are floundering in that class. Unless he talked about variance a lot on Monday (the day I wasn't in class), a lot of people are going to be completely lost if he gives a variance question.

However, he did give an interesting lecture on how a lot of elementary probability problems can be solved by multiple methods: it almost implies that there's a way to do each problem by either a) combinations, b) permutations, or c) the multiplication principle. One of the few lectures where I felt I learned something new.

Dr. S's class was interesting. First, a quiz on how to transform random numbers (or "random variables of U(0,1) distribution") into random variables of other types, say, X=Binomial(3,0.5) or Z=N(0,1). I felt like I nailed the quiz.

Second: the beginnings of hedging and mathematical modeling. FINALLY!! I've been waiting for this part of the course like a starving man waits for a steak dinner.

But third was very interesting: Dr. S. and I chatted for about ten minutes or so. I had a question about bird flu, believe it or not. It seems that SOA is going to call for research regarding a bird flu pandemic. Dr. S. talked in class about how for catastrophic events -- say, terrorist attack, lightning strike, and other "acts of God" -- insurers build clauses in insurance contracts, stating basically "this is not covered".

I asked him about how insurance companies typically handle things like bird flu.
His answer: they don't, for the most part. Premiums go up to cover the costs of the catastrophe in the following year and take decades to come back down to something approaching expected loss. We then discussed things like reinsurance, where insurance companies purchase insurance (!!) to move the risk of such catastrophes off onto someone else. We also talked about the mortgage and bond markets, and I listened with particular interest to Dr. S.'s comments about mortgage insurance ("there should be no way they make money, but they do...the numbers don't add up") and bond markets.

There was also a bit of a discussion about the role of the free market versus the role of the state insurance commissioner. For example, they say that in New Jersey you can't get auto theft insurance -- insurance fraud is so prevalent that a true premium for auto theft would be sky high. But in cases like that, state insurance commissions sign a law saying "no insurance premium can be above x dollars", obstensibly in order to keep the little guy from getting screwed.

What happens then is that an insurer sets up a LLC -- a limited liability corporation. If Joe's Insurance is forbidden to charge above x for auto theft, then Joe's Insurance sets up a "Joe's Insurance of New Jersey" as a LLC. Now, JINJ can only charge x dollars, and by the theory of pricing by expected loss, the probability of JINJ going bankrupt approaches 1.0. When that happens, the federal government steps in and covers the cash. So we all end up paying for the auto theft in NJ sooner or later, and Joe's Insurance isn't stuck with a ton of liability.

Very interesting stuff. This "reinsurance" business intrigues me. I also got to hear Dr. S. do his Arnold Schwarzenegger impersonation, which was definitely worth the trouble of coming to class today.

BTW, our good friend Ben didn't show up for class today. We'll see if he shows up for Intro Stats.

Saturday, February 25, 2006

Haven't Done Richard


Yep, haven't even touched any of the probability problems. With Exam P coming up in 2 months, I'm going to be heading for disaster if I don't get down to it.

Registration deadline for Exam P is March 15th, if you didn't know that. It's going to be a computer given class.

Other than that...no news. We renewed our lease, so I guess we'll be looking for actuary jobs in Atlanta.

If you need an actuary, please call me now. All phone lines are open.

Thursday, February 23, 2006

Testing Something, But I Don't Know What


Have returned from New York. The trip was good, definitely good. Didn't do much studying at all. Got back, studied about four hours total for an Intro Statistics test which was almost exactly like the review test the professor gave. Got a 98 as a score. Would have aced it, but I assumed the last problem was a "with replacement" and not a "without replacement" problem, which is a very important distinction in probability.

So, went back to class. Took a new quiz in the Intro Probability class taught by Mr. N. He's still quizzing over the same two chapters that he poorly taught before, and that quiz that he gave was a constipator. I can give you an example:

Suppose you purchase light bulbs from a factory. Your consignment of 50 light bulbus contains 2 defective light bulbs. Exactly how many light bulbs would you have to test before the probability of finding a defective light bulb exceeded 1/2?

This isn't a hard problem, really...but most of the class had probably never been given a problem like that one before. So I'm sure they were scratching their heads.

Ben, the guy who sits behind me, got a 3/15 on his last quiz. And I got a 14/15! I feel bad for Ben, who is certainly trying his best. Whereas there's a guy who just shows up on quiz days, who is doing just as badly, and I don't feel sorry for him.

Got the results back from Dr. S's test...which were weird. This was that weird test that was graded

total score = (number right) - 0.1*SQR(number wrong)

One person got seven right out of ten, and five got six right out of ten. I was one of the few who got six right. However, there was only one person who got a total score between six and seven, and only two getting between five and six. I got 6 right and one wrong, for a grand total score of 5.9.

As for grading: he doesn't know what he's going to do. His estimation was that anyone who got five problems right has a good chance at getting through Exam P. Myself, the score was a bit of a letdown because I'm such a competitive grade-grubber that I want to be the best student in the class, at all times. This is good, because it will teach me some humility.

We did learn some interesting information: how to stimulate a distruction with the RANDOM number generator that comes with Excel or some other programming language. It's just a question of using the inverse function of the CDF you want to simulate. This is the kind of information I'm looking for; something that will help me with math modeling.

Right now, I'm finding out that passing exams and getting good grades is not all that employers want to see. They want to make sure you know the computing languages: Microsoft Excel and Database, SAS, maybe some Virtual Basic. How I'm going to learn all of this stuff is beyond me. Of course, I could just lie to my employers and say I know it.

One of the persons in my stats class wondered what the ratio of males to females was in the actuary field. A UK Survey had the percentage of female actuaries to be about 24 percent of the total field, which I would say is fairly accurate...one out of every four actuaries is female, and that ratio is moving slowly towards 50-50.

Wednesday, February 22, 2006

Adversarial Relationship


Got back home from New York. The trip was wonderful, but I was looking forward to checking phone messages and mail -- when you're on a trip with two other people, you're limited to what they want to do.

So no e-mails from companies beating my doors down, but I got a call back from the actuarial recruiter.

Who is this actuarial recruiter, you might ask? Well, a couple of months ago, I sent an e-mail to a major actuarial recruiter. I'm not going to give you their names, but if you visit one of the major actuarial message boards, you can figure it out.

The first time, I was sent an e-mail where I was told, "Look, we're only looking for people who can work full time. And the fact that you're in school indicates the opposite. Call us in May."

So my wife suggested, "e-mail them again." Which I did, and I finally got the call back.

I got asked a few questions, sort of in an accusatory tone. Namely, "why did you stop being a nurse and start being an actuary?" ("Because I had only first heard of actuarial science a year ago.") "What's this about going to school full time?" ("Because it's a lot easier to pass exams if you have some math background, not to mention that @#$@#$ VEE requirement.")

It took about ten minutes to convince her my intentions were honest. Then the questions went to "where do you want to work?"

My answers: 1) Atlanta, 2) Pittsburgh (my wife visits Pittsburgh every week due to her job), 3) New York (outside). And the recruiter wanted me to expand that. So we went through a list of cities and finally expanded it to "everywhere in the Southeast US that has an airline hub. Oh, and Pittsburgh. And New York."

I'm pessimistic now about getting a callback. But hey, as a beginning actuary, pessimism is the default mode.

Friday, February 17, 2006

On to New York


Went to Friday classes. Friday is my shortest class day; I only have two classes on Friday as opposed to three on Monday and Wednesday.

In Dr. N's class, he was busy introducing the probability mass function and cumulative distribution function. This is old hat for me; my other classes reinforce these concepts. However, I could see the rest of the class scratching their heads.

Indeed, I feel sorry for any young junior or sophomore introduced to the concepts of probability for the first time -- Dr. N's English skills just aren't good enough to get him through the class. Oh, he can speak English. And he can understand it. He just can't figure out the best, most clear English explanations for hard to understand topics. Most of his lecture was very theoretical (including a proof of E(aX + b) = aE(X) + b).

As it turns out, the median score of his quiz on Wednesday was a 7 out of 15 points. I got a 12 out of it, two points loss for carelessness and one point lost for not understanding a crucial concept. (It should have been the other way around). The "crucial" concept was that in a case where you have three different colored balls, having "all balls of different colors" is NOT the compliment of "all balls of the same color". I just feel sorry for all of those sophomores and juniors -- Multivariable Calculus ain't gonna help them now.

As for Dr. S's class -- well, he hasn't graded the tests. What the point of that class was, I don't know. We talked about test taking strategies, and I only learned one thing I didn't know already -- it would be a good idea in Exam P to RANK questions you skip for difficulty, so that when you return after answering all the easy ones, you don't assume that all (temporarily) unanswered questions are created equal.

And...get this...Dr. S. admitted that he hadn't taken Exam FM. I think there were a few people who might have gasped. You would think that someone teaching an actuarial science course -- even someone whose college major was not actuarial science -- would have at least taken the first three exams. As far as the students were concerned, if you hadn't taken the actuarial exams as an instructor, you literally did not know what you were talking about in class.

I'm not going to worry about this class much anymore, and instead focus on solving example questions from the Exam P manual by ACTEX.

There was a study group meeting today at 1pm, but I will no longer attend. Not only were the bastards not there when I showed up last Friday, but I don't think there's much to be gained about discussing problems when I can do most of them on my own. So that should free up some time for me; now all I need is the sticktoitiveness to use that time wisely.

BTW, there will probably not be any entries until Tuesday or Wednesday. Off to New York to attend plays, museums, and "Letterman" on Monday in the audience. My wife and I were rather disappointed, however, to find that Monday's Letterman guests would be Marcia Cross of Desperate Housewives, which neither of us have watched, and "NASCAR winner" (the Daytona 500 is being held this weekend -- I think). Our only hope for entertainment from Dave's guests is if the winner of the Daytona is Jeff Gordon or Dale Earnhardt Jr. or some suitably colorful personality. With our luck, "NASCAR winner" will be some first-time winner with the charisma of a flat tire.

Thursday, February 16, 2006

Snow Crash


I woke up at 12:30 PM today.


Now how did this happen? I'll explain a bit about yesterday. First, I woke up, got dressed, surfed the web a bit and then straight to school. For breakfast, I had the impossible combination of a Dunkin' Donuts sausage croissant, and Mountain Dew. This sort of "non-food" breakfast would keep me going through the test.


Took the exam. To say that the format of the exam was weird is almost a misnomer. Dr. S. tried to make this exam as much like exam P as possible. For example, you have an average of 4 1/2 minutes to complete each exam P question -- therefore the test had 10 questions in 45 minutes.


But he just---couldn't stop---tinkering with things. First, he decided he would penalize people for guessing on answers, which they don't do on Exam P. Your final score was:

(number of questions right) - 0.1*(number of questions wrong)^2

That ^2 means "squared". So if you got say, three questions wrong, that took almost a full point away from the questions you got right.

Then his instructions stated that all students must answer Questions 1 through 4, opening one's self wide open to that wrong question penalty. Which is not what they do on Exam P, not at all. During Exam P, you not only have the liberty to answer (or not answer) whatever of the 30 or so questions you get in 3 hours time, you have the liberty to guess answers as well.

Finally, you don't have to show your work on Exam P. On this exam...you did. Why, I have no idea, since in his system, a page with work shown and missed by a digit scores exactly the same as a blank page where one just guessed the wrong answer -- a penalty against the number of answers right.

So I did six out of the ten questions. One was a question on those first four that I couldn't get and just had to guess. I feel like I got two others. My time management wasn't that great -- Question 10 I might have had a stab at but I never got to it, obsessing over Question #2 which I was forced to answer. But the other five, I feel very good about. I also could have just guessed at another question, since two wrong squared times 0.1 would just be 0.4 taken off.

From gossip, one person answered seven questions and another answered eight. I don't know if they got those questions right, however -- if they did, I can rest assured that I'm not top student in the class.

I suspect that Dr. S's finally test distribution will be nothing approaching a normal distribution. It will probably be more like a uniform distribution.

For those non-actuaries reading, a "normal" distribution is the classic bell curve. There would be a lot of scores clustered around a certain number, and a few outliers on the high side and the low side. I don't know if a normal distribution of answers implies that the test is an appropriate tool, but the classic "A-B-C" distribution is basically a normal curve skewed to the right, with mostly A, B, and C grades an a few D and Fs on the left end.

A "uniform" distribution is essentially a distribution where any outcome is exactly as likely as another. The scores are all over the place, a "dartboard" distribution. If you divided the distribution into five equal pieces, you'd find the same amount of scores in each piece.

With those "crappy" test distributions, a bad teacher can just choose some arbitrary point, and claim that the people scoring above that point passed and those who didn't reach it failed.

So after that, more soda and Stats class.

Then home. We ate out. Lots more soda. Then some more soda before bed.

Then insomnia until 3:30.

The a carbohydrate/sugar/caffeine induced crash, which is why I'm writing to you at 1:15 PM having been up for only about an hour. I gotta stop doing this to myself.

Tuesday, February 14, 2006

Wednesday Test


Received my Intro Probability test. Got a 37 out of 40, the highest grade in the class, which shouldn't be a surprise, since everything I've done in three other classes I've taken just reinforces the basic probability material. Still, it is something to feel good about, since my friend M only pulled a 32.

Test is tomorrow. I'll probably study about 4 hours or so for it today, and then wrap it up. This is one of those tests that it's hard to prepare for, because the professor hasn't given you any guidelines as to what you're supposed to be knowing.

Anyway, a few words about grade-grubbing. "Grade-grubbing" is the pursuit of the ever-elusive "A" on the transcript. Which, in actuarial science, doesn't mean much -- you can have a transcript full of "A"s and not pass any of the exams.

The thing is that a test -- any test -- is simply a measurement tool: "how much has the student mastered the material?" I need some assurance that I'm really mastering the material needed to pass Exam P in May 2006. I'm not interested in having to take Exam P multiple times.

The funny thing is I went to a seminar held by Dr. W., the chairman of the department, last Friday. It was funny for two reasons:

a) I believe I was one of only two Americans in a room out of 20 people. This is not a racist comment; rather, it's a comment about how fields like statistics and actuarial science are dominated by foreign students.

b) There was some discussion about the future of the actuarial science program at our school. Dr. W. wanted to work more cloasely with the stats department in redesigning the AS (actuarial science) curriculum. Apparently, our elite school
has had some complaints. Companies are claiming that the AS graduates are great at
passing tests, but they are lousy at the original thinking required for mathematical modeling.

Well, as an AS beginner student, let me say...duh. You can't bitch about original thinking when you say "you have to have x number of exams passed before we'll consider you for employment". If you make passed exams from CAS and SOA a hurdle to be jumped, then people are going to spend the bulk of their time jumping that hurdle.

Furthermore, from what I understand, companies look at transcripts, too. I once heard a rumor than anyone with a GPA below 3.00 would not be considered, because it indicated a lack of overall effort.

The result is that the good students, rather than say taking a computer class or a good risk management class (beyond the VEE requirements of say, corporate finance), will be grubbing for grades and passing those P and FM exams and not give so much as a thought to the necessities of actuarial modeling until they're forced to take Exam M.

I'm doing that. You probably would, too.

Sunday, February 12, 2006

You Goof Off!


Goofed off. Didn't spend much time studying. Finally got down to it tonight, studied 2 1/2 hours. The midterm is on Wednesday, and I have no classed on Tuesday, so I have one day to get it right.

It looks like I'm having to relearn everything about calculating E(Y), when Y is something like:

Y = 0 if X<200
= X if X>200

And I thought I knew that, and knew it sold.

You'd integrate xf(x) from 200 to infinity, and that would be your answer. I suspect that the reason Dr. S. has me confused is because he's, well...sloppy.

The more I look at the problems that represent Exam P, the more P looks insurmountable. I bumped into some problem that required some bizarre negative binomial distribution to solve it. Egad.

Applied for a job online and wrote the nice people at D. W. Simpson that I'm considering full-time work. Other than that, hope and prayer. Get the results back from the Intro Probability exam tomorrow. Wish me luck!

Saturday, February 11, 2006

The Incomprehensible Dr. S


Have already started studying for an exam on Wednesday in Dr. S's class.

The course is supposed to bring calculus, probability and risk management together. I put about 3 hours of study in for it today, remembering definitions and basically solving problems like the ones found on Exam P.

Boy, am I rusty. It's like I'm forgetting the most basic stuff, like calculating E(x) for a random variable, simple math errors. And Dr. S hasn't really given any direction to his course at all. I've seen a lot of probability, and a tad of risk management and calculus. I don't know what the point of his course is, and no one else seems to know what it is either.

Got some input back on Dr. N's Intro Probability course. (I actually took the sequel to Intro Probability before taking Intro Probability, but that's another story.) Eight problems, 45 minutes. No one got #7 right, which is this:

You have five boxes and five marbles. Each of the five marbles is assigned to a box. Assume that the chances that a marble is assigned to a particular box are equal (i. e., if the boxes are A, B, C, D, and E, then P(marble assigned to A) = ... =P(marble assigned to E)) and each marble MUST be assigned to one box.)

What is the probability that exactly one box will remain empty after all the marbles are assigned?


Can you figure it out? If you can, put the solution in the comments and I'll read it sometime in 2010.

An Actuary's Progress Begins



Hi.

This blog is titled "An Actuary's Progress". It deals with the real-life activities of a 40-year old married man, who had been a registered nurse for ten years, and suddenly, deciding to make that ol' Mathematics degree worth something again, began pursuing an actuarial career.

Hopefully, this blog will be exactly what it say it will be -- an beginning actuarial student's successes, failures, triumphs, and tragedies, from his second semester at a college in the South and all through his career as an actuary (hopefully, if he ever gets hired). It's a no-holds-barred look at a career that makes most people scratch their heads and say, "huh?"

I'll catch you later, definitely.