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Author Topic: Exam Concern  (Read 213 times)

Offline Actuaryguy65

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Exam Concern
« on: November 12, 2020, 06:44:49 PM »
I am starting to get through the loans section for the FM exam and I am having trouble grasping all of these formulas.  I would really appreciate if someone could help me come up with an easy pneumonic or efficient way to get all these loan formulas down thank you.

Offline BlueCalculus

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Re: Exam Concern
« Reply #1 on: November 14, 2020, 06:55:59 PM »
Hey Actuaryguy65, in terms of loans for the FM exam I feel that this is a very important concept to grasp for the exam.  A loan is essentially an annuity where the formula takes the form L = X*Aangle(n) where payments are normally made as an annuity immediate starting one period after time zero and include a specified interest rate.  In this formula L stands for the Loan amount, X are the regular payments, and Aangle(n) represents the annuity immediate of loan payments.  So, if we know any one of these variables we are able to solve for one of the other variables.  For example, if we know the regular payments of X, the interest rate i, and the number of periods n we can discount these back to time zero to find our original loan amount.  Hope that helps.