2 hours of new content added to Excel for Actuaries (Beginners)

The Basic Excel for Actuaries module has been updated! Two more hours of content has just been added. The topics include more tutorials on charting, pivot tables, and printing tips. You will need to download the latest tutorial workbook to follow along with the new lectures (A.1.0). Plus a brand new four part project has been added to test your skills. The project tests an aspiring actuary’s skills in Excel. Do you have what it takes to complete the tasks?

See:

A.1.8.0 for the Actuarial Excel Test Part 1

A.2.13.0 for the Actuarial Excel Test Part 2

A.3.7 for the Actuarial Excel Test Part 3

A.4.7.0 for the Actuarial Excel Test Part 4

TSC: R for Actuaries module is here!

New to the Technical Skills Course is a whole new module on the programming language R. R is very up and coming in the actuarial field especially with the SOA going to include R in exams starting in 2018. The introductory R lectures are up now as well as an actuarial project.

From an FSA: Getting ready for your actuarial internship

I get questions all the time on how to get ready for an upcoming actuarial internship. Here are some tips for you:

Do your homework on the company. Research the company that you will be working for. What products do they offer? Who are their competitors? What area of the company will you be working in? All of this will give you insights into how you can contribute from day 1.

Treat your internship as a long interview. Great job getting your foot in the door; now is the time to show what you can do. Get your technical skills ready so you can perform from day one (a good way to do this is to take the Technical Skills Course through The Infinite Actuary where you will learn Excel, VBA, Access, SQL, R, and SAS all in an actuarial context: http://www.theinfiniteactuary.com/exams/33)  Also, dress well. Show a good attitude every day.

Ask a lot of questions but be independent. There’s a balance here between when to ask questions. You want to be independent enough to solve problems on your own. But also realize that when you are stuck, go out and ask questions. Or when you finish a project, ask your peers for a peer review and get their input.

Enjoy your time! You have a great opportunity here with your internship. Learn as much as you can. Get to know your coworkers and pick their brains about their experience. Meet as many people as you can since you are now starting to build up your network.

Looking back at my career, my actuarial internship was a great experience. I learned a lot and met a lot of great people. Be careful not to spend your entire internship learning how to use Excel though. You should try to have that technical knowledge coming in so you can learn that vital actuarial work.

 

TSC: What’s new in December?

*** December 2016 Technical Skills Course Update ***

Over 2 hours of new content has been added to the Technical Skills Course bringing the total to over 11 hours of content, 175 video lessons, and 15 actuarial projects to apply your new skills. There is now a whole new set of lectures on building financial models in Excel (Section A.4).  You’ll be able to practice your new skillset through 2 new Excel projects (A.5 and B.4) and 1 new VBA project (E.4). Enjoy!

SOA’s Candidate Connect in Seattle, WA

TSC Students,

The SOA recently asked me to speak to actuarial candidates at their upcoming Candidate Connect event in Seattle, WA on October 29th. If you will be in the area, I encourage you to attend, meets lots of people and ask your questions about our field. Please introduce yourself if I bump into you. More information can be found here: https://soa.org/Professional-Development/Event-Calendar/2015-candidate-connect-seattle.aspx

TSC Student Capstone Project: Scott K.

As part of the TIA Technical Skills Course, there is a final capstone project that is quite open ended. The best analysis will be posted in this TSC blog.

Option Price analysis in MS Excel by Scott K.

Goal: To use option analysis to read the tea leaves of the investment community on the future of CNO.

I also went to yahoo finance and downloaded the adjusted closing historical prices of CNO, my goal here was to calculate a reasonable implied volatility and annualize it by multiplying by the square root of 252 (the number of business days in a year).

I used the standard deviation from the last 33 stock prices, I wanted above 30 so that I had enough prices for my standard deviation statistic to be meaningful but I also wanted a reasonable number of days because I don’t think the investment community uses very many historical days to price options, 33 days sounded right to me.  The produced an annualized implied volatility of 0.254.

I used the implied volatility 0.254 in the Black-Scholes pricing model along with the following parameters:

Days=16/365 because there are 16 days left until maturity from today

Stock Price= 18.38

Strike Price = 18

Risk free rate = 0.0007 (this is probably accurate enough, but after reading the paper, risk free rate could be probably closer to zero now)

Using these parameters, I calculated the BS value of the long call position to be 0.6057.

Comparing this to the actual price today, of 0.31, I am a whole 30 cents off, what gives?

I use the data table technique that TSC covers, and calculate the value of the long call using all the implied volatilities available to me, and the volatility that produced the smallest difference in magnitude of price between the Black-Scholes equation and the actual market was 0.188, the volatility from using stock prices up to 5/13/2015 (which is the history of the past 13 stock prices only).

What does this tell me?  This tells me that the investment community actually believes that the price of CNO is so stable that it doesn’t need as much history as I believed it did to evaluate its volatility and price it.  Therefore, I believe the investment community believes CNO will probably not change very much in stock price between now and June 19.

For a visual, I created a binomial stock price model to illustrate that if someone owned a long position for this particular 18 strike CNO call, the binomial model advices that the investor should hold onto it at this time because the intrinsic value of the call is greater if it were held for longer instead of being used immediately today.

ScottK_TSC_CapProj

 

Want to build up your actuarial technical skills? Enroll in TIA Technical Skills Course, today.