Reflections on the Spring 2008 Actuarial Exam 3F / Exam MFE (2008)

G. Stolyarov II

See Mr. Stolyarov's Index of Selected Writings, Originally Published on Associated Content / Yahoo! Voices.
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Note from the Author: This article was originally written on May 15, 2008 and published on Associated Content (subsequently, Yahoo! Voices), where it earned over 8,800 views until the closure of Yahoo! Voices in 2014. I passed during the sitting of Exam 3F/MFE to which this article refers, with a grade of 8. To preserve a record of my writings following the shutdown of Yahoo! Voices, I have given this article a permanent presence on this page. 

~ G. Stolyarov II, July 22, 2014

It is the late evening of May 15, 2008, and I have just taken the most difficult exam of my life to date - the Spring 2008 Exam 3F/MFE, sponsored by the Society of Actuaries and the Casualty Actuarial Society. This is quite a claim, as I have taken some difficult exams in the past and done considerably well on them. To establish my credentials in giving these remarks, I scored 1580 on the old SAT, had three perfect SAT II scores, earned 8 marks of 5/5 on Advanced Placement exams, received 10/10 on actuarial exam 1/P and 9/10 on actuarial exam 2/FM, and been a straight-A student my entire life. In addition, I am a National Merit scholar, a mathematics/economics major, and first-place winner of two Illinois state mathematics competitions. I studied for a full three months for actuarial exam 3F/MFE and compiled a free study guide to aid other students in doing so. This study guide closely followed the required reading for the exam, R. L. McDonald's Derivatives Markets, as well as prior exam questions from both the Casualty Actuarial Society (CAS) and the Society of Actuaries (SOA). If those who oversee entry into the actuarial profession want anybody to be admitted to it, people like me should certainly be on the list.

When I sat to take the exam, however, I found a glaring discrepancy between the exam's composition and what actuarial students preparing for it had been led to expect by both the official exam syllabus and the publicly known questions from prior exams. Moreover, the exam was a departure from the manner in which McDonald's text covered the required material, and the exam's emphasis did not coincide with the emphasis placed by McDonald in his book on virtually any of the concepts on the syllabus.

By my own highly subjective and uncertain estimates, I felt reasonably confident on about 13 to 14 of the 20 exam questions, which is not necessarily to suggest that I had that number correct. For at least another 4 questions, I made educated guesses. For 2 of the questions, I had to make guesses virtually at random, because little time was given in the two hours of the exam to thoroughly think these questions through. I had originally intended and expected to get a 9 or 10 on this exam - as has been the case for me on prior actuarial exams. Now I believe that this is likely out of the question. Just passing this exam would be a tremendous accomplishment - both for me and for anyone else taking it. I do not know at this time whether I passed or failed, due to the widespread lack of consensus in the popular answer keys (PAKs) created by polling examinees several hours after the test's end. If the PAKs are so unreliable as to be virtually useless, this says something about the exam's quality and degree of reasonableness.

What is the spirit in which these remarks are written? I do not mean to lay blame on any individual(s) or organization(s), as I am simply ignorant as to how the exam was compiled, who compiled it, and the motivations behind their doing so. I will not let hunches and prejudices, however accurate, get in the way of an objective exploration of the issues involved. Nor do I write this out of vindictiveness or out of a desire to vent my considerable frustration at this exam - although my all-too-human temperament and emotions might be transparently obvious to readers of these remarks. Furthermore, I will not go so far as to challenge this exam's legitimacy or to express publicly any personal resentment with regard to my performance on it. Whether I passed or failed, I intend to accept the result and continue with my life and work as befits their circumstances. Instead, I mean to pose several fundamental questions and address issues vital to the composition of future actuarial exams as well as to the culture of the actuarial profession at large.

We - meaning all actuarial students, employees, theoreticians, instructors, and exam compilers - need to ask ourselves: what is the purpose of actuarial exams? Is it to certify qualified individuals, who have demonstrated not only adequate knowledge of the concepts but also adequate effort in learning them, or is it to bamboozle people and expect them to think esoteric thoughts on their feet, punishing them if they fail to recognize which mystical insight they are expected to pull out of thin air at which time?

If we believe that the purpose of actuarial exams is to certify individuals who have studied and learned the materials explicitly mentioned on the syllabus, then actuarial exams ought to have the following characteristics.

1. Intertemporal consistency. Plainly put, prior exams should be accurate guides as to what will appear on subsequent exams. There might be one or two new kinds of questions included in each sitting of an exam, but no more. By looking at what was asked on previous exams, finding out how to do those problems, and understanding why those problems are solved as they are, students should be able to amass sufficient knowledge and skills to pass the exam. In the Spring 2008 Exam 3F/MFE, virtually no questions were structurally identical to publicly available prior CAS or SOA exam questions, and a slight minority of questions substantively resembled those prior questions. Thus, the Spring 2008 Exam 3F/MFE fails the intertemporal consistency criterion.

2. Straightforwardness. Many topics on actuarial exam syllabi have extremely common, straightforward, and methodical applications that anybody who has taken the time to study the course material and work these problems should be able to recognize and solve. These, and not the more obscure applications of syllabus concepts, ought to comprise the majority of actuarial exams. In the Spring 2008 Exam 3F/MFE, where syllabus concepts appeared, they were frequently disguised, and the examinees were expected to intuit which concepts were applicable where, rather than being instructed to apply specific concepts or being able to derive their applicability in any reasonable and timely fashion.

3. Friendliness to self-study. One of the Principles of the Casualty Actuarial Society for Basic Education states that "The CAS is committed to maintaining self-study as one route for attainment of designations." As someone who has engaged in self-study and methodically followed both the required text for Exam 3F/MFE and prior exam questions, I believe that this principle has been violated in the Spring 2008 Exam 3F/MFE. A reasonable, intelligent person who has studied independently, with the aid of course readings and past exams, can be expected to learn all the formulas, ideas, and common applications of concepts on the syllabus. He or she can also be expected to accurately replicate problem types with which he or she has had prior experience.

But when a completely new type of problem is given on the exam - a problem not emphasized on either the course syllabus or in the required readings or on prior tests of the same sort - then the exam comes to expect superhuman feats of students who take it for completely different goals than the presence of unusual and unexpected questions might imply. Actuarial students are not theoretical academicians, nor do they make sport of developing new, original, and previously unseen applications of exam-related concepts. They aspire to be practical professionals who learn pre-established theoretical frameworks and use them in relatively simple, predictable day-to-day situations.

The key attributes of practical professionals are determination, work ethic, good memory, above-average intelligence, straightforwardness, honesty, consistency, non-procrastination, ability to follow directions, and self-restraint. Intuition and quick-mindedness on the level of the great pioneers of mathematics and actuarial science are not on this list. While the above attributes of practical professionals are particularly conducive to being developed independently through self-study, the latter more elusive qualities are either formed extremely early in life or can be cultivated only by exposure to the greatest theoretical minds of one's time. Neither of these options is available to most individuals who choose to pursue actuarial exams through self-study. We can work hard, memorize, understand, and apply. How well we think unusual thoughts on the spot is largely outside the ability of our studying to determine.

4. Avoidance of trick questions. The Principles of the Casualty Actuarial Society for Basic Education further state that "The goal is to produce examinations that contain representative, high-quality questions that test candidates' knowledge of the material. Trick questions are deliberately avoided, and the wording of each question is considered carefully to eliminate possible ambiguities." And yet, how can questions to which the very applicability and manner of application of items on the syllabus is unclear be considered anything but trick questions? Testing candidates' knowledge of material would seem to suggest a direct correlation between amount of directed studying effort put in and one's performance on the exam. But when the exam tests materials only tenuously or tangentially related to the syllabus - or materials that employ the course material in mainly unusual and unforeseeable ways - this direct correlation is absent, and intelligent test-takers vary widely in their views of how to correctly approach specific problems. This was evident in the considerable disagreement in the PAKs for the Spring 2008 Exam 3F/MFE.

5. Ample time allotment. If some questions do require a bit of thinking or a lot of rote but time-consuming calculations, enough time should be given for students to engage in these until they are sufficiently content to stop. I believe that the two hours given for the Spring 2008 Exam 3F/MFE were not sufficient to ensure this for all students, given the level of difficulty of this exam. For an exam more closely resembling prior CAS or SOA exams, the two hours might have been reasonable, but for this exam, either more time should have been allotted, or the difficulty should have been scaled down to fit the time.

In real life, one is seldom given deadlines of a few hours or minutes to accomplish a substantial intellectual feat. Even most urgent deadlines give the non-procrastinator at least a day or two to resolve problems to his satisfaction. Whether he resolves them correctly is largely a function of how much effort he puts in and when he himself decides to stop. To replicate this condition, exams of all levels of difficulty should give candidates more than enough time to address the questions to their own satisfaction. After all, the purpose of exams is to verify candidates' knowledge, not to hold a speed race.

I address these principles to the actuarial community in general and to authors of future exam questions in particular, in the hope that my remarks might influence the composition and principles behind the creation of future actuarial exams. I do not believe that all actuarial exams are unreasonable in their difficulty. In fact, most of them are just right. My judgment after taking exams 1/P and 2/FM is that those exams were fair, reasonable tests of the course material. Likewise, prior versions of exams 3F and MFE were largely reasonable. The Spring 2008 Exam 3F/MFE was a tragic anomaly - one that I hope will not be repeated.

My sentiments are not isolated, and they have been expressed in considerably less civil terms on numerous discussion boards immediately following this exam. I hope that, by giving my impressions structure and rational foundations, I might be more persuasive to the writers of exam questions than those who simply write one-line complaints - however justified those complaints might be. I do not accuse anyone of malice or even of incompetence. But I do believe that a discrepancy in principles and expectations has arisen between the writers of exam questions and the community of actuarial students, and that the Spring 2008 Exam 3F/MFE is the most significant evidence of this discrepancy to date. I hope that this gap can be bridged and that reason and common sense can prevail, in a manner consistent with the uplifting of the actuarial profession and its attractiveness to increasing numbers of intelligent, productive individuals.

See sections of The Actuary's Free Study Guide for Exam 3F / Exam MFE. Decide for yourself if individuals who have either written or used this study guide competently and conscientiously deserve a passing mark on the exam for which it was intended.

Gennady Stolyarov II (G. Stolyarov II) is an actuary, science-fiction novelist, independent philosophical essayist, poet, amateur mathematician, composer, and Editor-in-Chief of The Rational Argumentator, a magazine championing the principles of reason, rights, and progress. 

In December 2013, Mr. Stolyarov published Death is Wrong, an ambitious children’s book on life extension illustrated by his wife Wendy. Death is Wrong can be found on Amazon in paperback and Kindle formats.

Mr. Stolyarov has contributed articles to the Institute for Ethics and Emerging Technologies (IEET), The Wave Chronicle, Le Quebecois Libre, Brighter Brains Institute, Immortal Life, Enter Stage RightRebirth of Reason, The Liberal Institute, and the Ludwig von Mises Institute.

In an effort to assist the spread of rational ideas, Mr. Stolyarov published his articles on Associated Content (subsequently the Yahoo! Contributor Network and Yahoo! Voices) from 2007 until Yahoo! closed this venue in 2014. Mr. Stolyarov held the highest Clout Level (10) possible on the Yahoo! Contributor Network and was one of its Page View Millionaires, with over 3,175,000 views. Mr. Stolyarov’s selected writings from that era have been preserved on this page.

Mr. Stolyarov holds the professional insurance designations of Associate of the Society of Actuaries (ASA), Associate of the Casualty Actuarial Society (ACAS), Member of the American Academy of Actuaries (MAAA), Chartered Property Casualty Underwriter (CPCU), Associate in Reinsurance (ARe), Associate in Regulation and Compliance (ARC), Associate in Personal Insurance (API), Associate in Insurance Services (AIS), Accredited Insurance Examiner (AIE), and Associate in Insurance Accounting and Finance (AIAF).

Mr. Stolyarov has written a science fiction novel, Eden against the Colossus, a philosophical treatise, A Rational Cosmology,  a play, Implied Consent, and a free self-help treatise, The Best Self-Help is Free. You can watch his YouTube Videos.Mr. Stolyarov can be contacted at

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Learn about Mr. Stolyarov's novel, Eden against the Colossus, here.

Read Mr. Stolyarov's new comprehensive treatise, A Rational Cosmology, explicating such terms as the universe, matter, space, time, sound, light, life, consciousness, and volition, here.

Read Mr. Stolyarov's new four-act play, Implied Consent, a futuristic intellectual drama on the sanctity of human life, here.