Thanks to the six-figure median salary of an actuary, a bachelor’s degree in actuarial science is among the top degrees for the highest-paying business careers. To excel in this career field – not to mention, to pass the series of actuarial exams needed to reach associate-level certification in this profession – you will need a strong background in high-level mathematics. In particular, you should expect to take numerous courses in branches of mathematics such as calculus, probability and statistics and financial mathematics.
College-level calculus may be among the hardest courses some students take, but for actuarial science majors, it’s only the beginning. If you’d like to be an actuary, you should take three semesters of calculus, according to Be An Actuary.org, an educational resource jointly sponsored by the Society of Actuaries and Casualty Actuarial Society. Most actuarial programs accomplish this by integrating Calculus I and II into the major curriculum early on and then having students progress to multivariable calculus.
Calculus is an important subject of study for actuaries, but they often use this branch of mathematics more indirectly, in the sense that it underlies the branches of math they use most commonly, than they do in a direct sense. In a nutshell, calculus can be described as the mathematical framework for studying and modeling quantitative change. As actuaries look at trends in the data that pertains to the study of risk, what they are looking at is this quantified change. Although calculus isn’t one of the topics of the professional exams actuaries must take to progress through the field, you must have a thorough foundation in this branch of mathematics to pass even the early actuary exams.
Actuarial science students also usually take a semester of linear algebra, as well as optional electives in differential equations and discrete and continuous mathematical models. Throughout your math coursework, learning mathematical modeling is a priority.
Probability and Statistics
Probability is the first actuarial exam most aspiring actuaries take. Known as Exam P, this exam tests your understanding of calculus-based probability and statistics. Generally, test-takers are expected to know basic probability concepts, the concepts and applications of discrete and continuous univariate random variables and the concepts and applications of multivariate random variables.
Actuarial science majors should take two semesters of probability and statistics coursework, BeAnActuary.org reported. Some of the potential statistics courses you may take as an actuarial science major include fundamentals of probability, statistical data analysis, applied statistics, linear regression and mathematical statistics. Your coursework in probability and statistics is critical to doing the work of an actuary. These related branches of mathematics focus on analyzing and interpreting data. In the case of statistics, this analysis can help draw conclusions about research and relationships between variables, while in the case of probability, it is used to predict future outcomes based on existing data.
Part of what you cover in your statistics course may be the coding language R, which is widely used in the actuarial science field for statistical computing. Actuaries use R to perform statistical calculations and data analysis and to calculate the time value of money.
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Actuarial science is a field where business and math intersect. In addition to being a crucial part of the actuarial science curriculum, Financial Mathematics is one of the actuarial exams – usually, the second exam actuaries take. Exam FM covers topics like calculating current and future value of money given an interest rate, calculating the value of annuities with non-contingent payments, performing loan calculations and bond calculations, calculating rates of returns on portfolios, calculating cash flow immunization, calculations of interest rate swaps and the components and determinants of interest rates.
In a financial mathematics course, you learn about the mathematical concepts and theories behind many finance topics. The content covered in this class can include everything from bonds and annuities to compound interest and depreciation. As students study mathematical models of finance functions, they learn to perform the kind of calculations that will be expected of them on Exam FM, which aspiring actuaries often take before they graduate.
To fully understand the math behind financial concepts, students also need a strong foundation in those concepts to begin with. Although they aren’t math courses per se, finance courses are an important part of an actuarial science student’s curriculum. To fulfill your business core curriculum, you should expect to take classes such as introduction to finance, risk management and insurance principles, investments, financial management and derivatives and financial risk management.
Along similar lines are your specialized actuarial science courses, which may start with an introduction to actuarial science course. Other specialized coursework may include actuarial models, actuarial analytics, financial economics for actuaries, corporate finance for actuaries, actuarial probability and a practicum or seminar in actuarial science. You may also take classes in the different types of actuarial practice, such as property and liability insurance or group and health benefits.
Other business core coursework might include studies in microeconomics, macroeconomics, accounting and business law.