# Brief Descriptions

of

Actuarial Courses

This document contains brief descriptions of various courses required or recommended in the
Actuarial Studies concentration, *presented from the perspective of the actuarial
program.* For *official* information on these classes, you should see
The Undergraduate or Graduate Catalog of The University of Texas at Austin (and the
Course Schedule for information on a particular semester's offerings). For information on
the SoA/CAS exams and validation by educational experience mentioned in the descriptions, see
the page on professional exams.

Contained below is information on:

- Actuarial Foundations classes offered by the Mathematics Department:
- Mathematics classes:
- M408K, L, &M (or 408C & D) Calculus
- M341 & 340L Linear algebra
- M362K Probability
- M358K (& M378K) Statistics
- M339U (= M389U) Actuarial contingent payments I
- M339V (= M389V) Actuarial contingent payments II
- M339W (= M389W) Financial mathematics for actuarial applications
- M339J (= M389J) Probability models with actuarial applications
- M349P (= M389P) Actuarial statistical estimates
- M349R Applied regression and time series
- M139S (=M189S) Seminar on issues in actuarial practice
- M362M (can equal M394C) Introduction to stochastic processes I
- "M362N" (can equal M394C) Introduction to stochastic processes II
- M175-W substantial-writing-component add-on to M139S (= 189S)
- M374G (= 384G) Regression analysis

- Business and Economics classes:
- ACC311-312 Accounting (or the weaker ACC310F Foundations of accounting)
- ECO304K & L and 420K Economics
- FIN357 Business finance (or the weaker FIN320F Foundations of finance)
- FIN377.2 Financial risk management (Options)
- FIN367 Investment management
- LEB320F Business law foundations
- MAN320F Management foundations
- MKT320F Marketing foundations
- MIS383N topics on mathematical finance
- MSC380 topics on mathematical finance
- RM357E Risk management
- RM369K Pensions and health & life insurance
- RM377 Property & casualty insurance
- RM395 topics on risk management
- STA376 Statistics in business forecasting
- STA380 topics in statistics
- Computer programming classes:

## Descriptions

- Actuarial Foundations classes offered by the Mathematics Department:
**ACF329****Interest theory (= M389F)**

With ACF129D (or FIN377.2 or self study), this covers the content of Joint SoA/CAS Exam FM/2 on mathematical interest theory. Its prerequisite is a grade of C or better in M408L (or M408D) . The material is not sophisticated mathematically, but most students find the word problems and the mass of computational formulas challenging. Actuarial students should take this as early as possible in their careers. Offered every long semester.**ACF129D****Introductory actuarial financial mathematics**

With ACF329 (= M389F), this covers the content of Joint SoA/CAS Exam FM/2 on mathematical interest theory. Its prerequisite is a grade of C or better (or current registration) in ACF329. Can only be taken on a Pass/Fail basis. The material is not sophisticated mathematically, but most students find the word problems and the mass of computational formulas challenging. Actuarial students should take this as early as possible in their careers. Offered every Spring semester (and possibly more often, depending on the availability of teaching staff and on demand).- Mathematics classes:
**M408K, L & M (or 408C & D)****Calculus**

While both sequences cover the standard college material on calculus (needed as background for Joint SoA/CAS Exam P/1), the KLM sequence is recommended as more reasonably paced; these classes are offered every semester.**Business College students**should note that the Business College gladly accepts these as substitutes for the partial sequence M408K & L it requires.**M341 & 340L****Linear algebra**

Each of these courses by itself covers the linear algebra to help understand the probability and statistics of several variables (and assumed as background on the Exams) and is offered every semester; A grade of C or better in M408L (or 408D) is the prerequisite. M341 is taught in classes of about 25, while M340L is taught in classes of about 120. M340L covers more facts about solving problems using linear algebra, while M341 emphasizes understanding the underlying ideas and is prerequisite for some of the proof-oriented classes such as M328K of which one is required for the B.S. in Mathematics (Actuarial Option). Mathematics majors should therefore take M341 rather than M340L; a student who took M340L and then decided to become a Mathematics major will be allowed to count M340L instead of M341 but would be well advised to take a course that introduces logic and proofs such as PHL313K before taking a proof-oriented Mathematics course.**M362K****Probability**

This is the standard college calculus-based course on mathematical probability, and covers the mathematical content of Joint SoA/CAS Exam P/1. Its prerequisite is a grade of C or better in M408L (or 408D); this course should be taken early in the career of any actuarial student. It is usually offered every semester.**M358K (& M378K)****Statistics**

M358K and M378K are standard first courses in mathematical statistics. Each covers much the same material, although M358K is more applications-oriented and includes an introduction to simple linear regression that is useful for actuarial students; thus, M358K is preferred for actuarial students. Both M358K and 378K assume a calculus-based probability course (M362K) as the prerequisite, with a grade of C or better. Each is usually offered every long semester (and some summer terms). It is assumed as background on the SoA Exams and explicitly tested on CAS Exam 3L.**M339U = M389U Actuarial contingent payments I**

In conjunction with M339V (=389V) this covers the content of SoA Exam MLC and the "life contingencies" material on CAS Exam 3L. Prerequisites are M362K with a grade of C or better, and grades of C or better (or current registration) in both ACF329 (= M389F) and M341 (or 340L). Topics covered: survival models, elementry Markov Chains; life-insurance present-value random variables. Meets with M389U, the corresponding graduate-course number. Offered every Fall (and possibly in Spring depending on the availability of teaching staff and on demand).**M339V = M389V Actuarial contingent payments II**

In conjunction with M339U (= 389U) this covers the content of SoA Exam MLC and the "life contingencies" material on CAS Exam 3L. The prerequisites are grades of C or better in both M339U (= M389U) and ACF329 (= M389F). Topics covered: annuity present-value random variables, the mathematics of insurance premiums and reserves (with and without expenses), Poisson processes. Meets with M389V, the corresponding graduate-course number. Offered every Spring (and possibly in Fall depending on the availability of teaching staff and on demand).**M339W = M389W Financial mathematics for actuarial applications**Covers the content of Joint Exam MFE/3F. The prerequisites are grades of C or better in both ACF329 (= M389F) and M362K, and credit for ACF129D (or a grade of C or better in FIN377.2). Topics covered: financial options and their pricing including the Black-Scholes formula, option greeks, geometric Brownian Motion price models, interest-rate models. Meets with M389W, the corresponding graduate-course number. Offered every Fall (and possibly in Spring depending on the availability of teaching staff and on demand).

**M339J = M389J****Probability models with actuarial applications**

In conjunction with M349P (= 389P), this covers the content of Joint SoA/CAS Exam C/4. The prerequisites are M362K and 358K (or 378K), each with a grade of C or better.Topics covered: severity- and frequency-of-loss models, compound models, empirical estimation, moment matching, percentile matching, maximum-likelihood estimation. Meets with M389J, the corresponding graduate-course number. Offered every Spring (and possibly in Fall depending on the availability of teaching staff and on demand).**M349P = M389P Actuarial statistical estimates**

In conjunction with M339J (= 389J), this covers the content of Joint SoA/CAS Exam C/4. Prerequisites are grades of C or better in both M339J (= 389J) and M341 (or 340L). Topics covered: statistical estimates for frequency- and severity-of-loss random variables and for survival models; credibility theory; elementary simulation in actuarial and financial modeling, ruin theory, risk measures. Meets with M389P, the corresponding graduate-course number. Offered every Fall (and possibly in Spring depending on the availability of teaching staff and on demand).**M349R Applied regression and time series****.**

This course provides validation by educational experience for the SoA/CAS requirement of knowledge of computational methods of data analysis using regression and time series. Prerequisite is any introductory statistics course. Offered every Spring (and possibly in Fall depending on the availability of teaching staff and on demand).**M139S (=189S) Seminar on issues in actuarial practice****.**

This lecture series presents talks, panels, and discussions with practicing actuaries addressing current issues important in actuarial practice; possible topics include ethics, consulting skills, career options, et cetera. Prerequisites are grades of C or better in all of the following: ACF329 (= M389F), M339J (= 389J) or 339U (= 389U), and in addition at least one of (or current registration in) M339U (= 389U) & M339V (=389V) & M339J (= 389J) & M349P (= 389P). Meets one evening a week about every three weeks. Offered every Spring.**M175-W substantial-writing-component class**

This provides one hour of substantial-writing-component credit for writing papers on the presentations in M139S (= 189S). The prerequisite is simultaneous registration in M139S (= 189S). Offered every Spring.**M362M (can be M394C) Introduction to stochastic processes I**

(Graduate students can take this as M394C Conference course on probability and statistics.) This course provides a more detailed treatment of stochastic processes than provided in the specialized actuarial classes M339U (= 389U) and M339V (=389V) and M349P (= 389P). Topics include simulation, the simple random walk, branching processes, and Markov chains. The prerequisites are M362K and M341 (or 340L).**"M362N" (can be M394C) Introduction to stochastic processes II**

(Not yet officially named M362N. Undergraduates can take this as M175T Conference course, when offered with this topic; graduate students can take this as M394C Conference course on probability and statistics, when offered with this topic.) This course continues M362M, which is the prerequisite. Topics include elementary martingales, Brownian motion, elementary stochastic calculus, and Poisson processes.**M374G = M384G Regression analysis**

This provides a mathematical treatment of the regression part of M340R. M358K (or M378K) is the prerequisite, although undergraduates must get permission from the instructor in order to register. Topics covered: regression. Meets with M384G, the corresponding graduate-course number. Usually offered each Fall.- Business and Economics classes:
**ACC311-312 (or 310F) Accounting**

Since an actuary is a business person, a basic knowledge of accounting can be quite useful and is assumed as background knowledge in the SoA/CAS exam systems (although it is not explicitly examined). It can be especially useful for actuaries working for insurance companies. The two-semester sequence ACC311-312 is required by the Business College for its majors and can be taken by Mathematics majors that have the special advising code (available from Professor Daniel) for Math-major actuarial students. Others must seek special permission from the College of Business Administration or take the weaker non-majors course ACC310F. ACC311-312 is prerequiste to FIN357 (although Math-major actuarial students may substitute ACC310F), and FIN357 provides validation by educational experience for the SoA/CAS requirement of knowledge of finance.**ECO304K & L and 420K****Economics**

Since an actuary is a business person, a basic knowledge of economics can be quite useful; ECO304K & L (or ECO304L & 420K) provide validation by educational experience for the SoA/CAS requirement of knowledge of micro- and macro-economics.**FIN357 (or 320F) Finance**

Since an actuary is a business person, a basic knowledge of finance can be quite useful; FIN357 provides validation by educational experience for the SoA/CAS requirement of knowledge of finance. FIN357 is required by the Business College for its majors and can be taken by Mathematics majors that have the special advising code (available from Professor Daniel) for Math-major actuarial students. Others must seek special permission from the College of Business Administration or take the weaker non-majors course FIN320F. The prerequisites for FIN357 are ECO304K & L, ACC311-312 (although non-Business actuarial students may substitute ACC310F), STA309 (for which M358K (or M378K) Statistics may be substituted), and BA324 (waived for Math-major actuarial students).**FIN377.2 Financial risk management**

Many actuaries feel that actuaries need a stronger background in financial options than the small amount that is sometimes covered in FIN357. FIN377.2 provides a treatment of basic options that should be sufficient---as an alternative to ACF129D---for the testing of that topic on Joint Exam FM/2. For actuarial students, the prerequisite for FIN377.2 is FIN357.**FIN367 Investment management**

Since an actuary is a business person, a basic knowledge of investments can be quite useful, and material on investments is covered in some of the advanced actuarial exams. FIN367 is a restricted class; non-Business College students must seek special permission from the Business College in order to enroll. Its prerequisite is FIN357.**LEB320F Business law foundations**

Since an actuary is a business person working in a heavily regulated field, a basic knowledge of business law can be quite useful and is assumed as background knowledge in the SoA/CAS exam systems (although it is not explicitly examined). LEB320F provides an introduction to the legal problems confronting businesses in the global environment. Prerequisite: upper-division standing.**MAN320F Management foundations**

Since an actuary is a business person, a basic knowledge of management can be quite useful. MAN320F provides an introduction to the management of organizations, with issues addressed from the perspectives of strategy and planning, organizational behavior, and operations management. Prerequisite: upper-division standing.**MKT320F Marketing foundations**

Since an actuary is a business person, a basic knowledge of marketing can be quite useful. MKT320F provides an introduction to basic concepts and terminology in marketing: the process of developing marketing strategy, the role of marketing activities within the firm, external influences that affect the development of marketing strategy, and basic analytical tools appropriate to marketing decision making . Prerequisite: upper-division standing.**MIS383N Topics in information-intensive business processes**

Those actuarial students interested in applying mathematical tools to finance may find interesting two of the topics offered under this graduate course number: Computational finance, and Financial engineering. Prerequisites vary by topic; see the Course Schedule for the prerequisites when a specific topic is offered.**MSC380 Seminar in management science**

Those actuarial students interested in applying mathematical tools to finance may find interesting two of the topics offered under this graduate course number: Financial optimization, and Mathematics in finance. Prerequisites vary by topic; see the Course Schedule for the prerequisites when a specific topic is offered.**RM357E****Risk management**

This is an excellent non-mathematical introduction to the business side of the risk-management questions that actuaries analyze. It can be taken by Business College students as well as by Mathematics majors that have the special advising code (available from Professor Daniel) for Math-major actuarial students. Others will have to get special permission from the instructor of RM357E to enroll---which is usually granted for actuarial students.**RM369K****Pensions and health & life insurance**

This course builds on the prerequisite RM357E by examining those practice areas for which the SoA Exams (as opposed to the CAS Exams) are relevant. It can be taken by Business College students as well as by Mathematics majors that have the special advising code (available from Professor Daniel) for Mth-major actuarial students.**RM377 Property & casualty insurance**

This course builds on the prerequisite RM357E by examining those practice areas for which the CAS Exams (as opposed to the SoA Exams) are relevant. It can be taken by Business College students as well as by Mathematics majors that have the special advising code (available from Professor Daniel) for Math-major actuarial students.**RM395 Seminar in risk management**

Those actuarial students interested in applying mathematical tools to the general analysis of business risk may find interesting some of the topics offered under this graduate course number, such as: Introduction to risk management, Managing financial risk, Risk management & finance, Managing environmental risk, Managing international risk, and Managing employee risks & benefits. Prerequisites vary by topic; see the Course Schedule for the prerequisites when a specific topic is offered.**STA376 Statistics in business forecasting**

This class provides additional material on the time-series portion of M349R. STA376 is a restricted class; non-Business College students must seek special permission from the Business College in order to enroll.The prerequisite is a basic background in statistics.**STA380 Seminar in business statistics**

Those actuarial students interested in a deeper education in statistics may find interesting some of the topics offered under this graduate course number, such as: correlation & regression analysis; forecasting; risk analysis and management. Prerequisites vary by topic; see the Course Schedule for the prerequisites when a specific topic is offered.- Computer programming classes:

Computer skills, including programming in at least one programming language, have become a necessity for those seeking entry-level actuarial jobs. Students wishing to stress their programming skills may want to take additional programming classes that teach a variety of languages such as C++ or COBOL or FORTRAN. [Actuarial students majoring in Computer Sciences need not take programming classes beyond those required in the major, although learning a programming language used in the business world would be worthwhile.] Students should also develop microcomputer skills such as word-processing and spreadsheet and database use; inexpensive (for UT-Austin students) online courses on microcomputer skills are offered by the computer training online operation of the UT-Austin Division of Continuing & Extended Education.

**Spreadsheet and database software online courses**

Employers assume that entry-level actuaries have basic microcomputer skills, especially with spreadsheets (Excel, for example) and databases (Access, for example). Various online courses (at very low cost for UT-Austin students) on microcomputer software, including spreadsheets and databases, are offered by the computer training online operation of the UT-Austin Division of Continuing & Extended Education. CS327E is a more extensive introduction to databases.**ASE201 Introduction to computer programming**

This is a course in the fundamentals of programming, usually using C++ or sometimes FORTRAN. Students not in the College of Engineering should contact the instructor for permission to take this class.**CS303E Elements of computers and programming**

This is a first course in programming for those not majoring in Computer Sciences. Its prerequisite is M305G with a grade of at least C, or an equivalent score on the SAT II subject test in Math Level I, IC, or IIC.**CS313E Elements of software design**

This is a first course in data structures, use of software library packages, and complexity of common algorithms, for those not majoring in Computer Sciences. Its prerequisite is CS303E or the equivalent with a grade of at least C.**CS326E Elements of networking**

This is a first course in the internet, packet switching, local and wide-area networks, switches and routers, protocols, IP, TCP, FTP, UDP, HTTP, DNS, telnet, the Web, HTML and related languages, integration of Web pages and programs, and security issues, for those not majoring in Computer Sciences. Its prerequisites are CS303E and CS313E or the equivalent with grades of at least C.**CS327E Elements of databases**

This is a first course in database models, query languages, performance, transaction locking and commit, failure recovery, and security, for those not majoring in Computer Sciences. Its prerequisites are CS303E and CS313E or the equivalent with grades of at least C.**MIS304 Introduction to business programming**

This is a course in the fundamentals of programming for business applications. Actuarial Mathematics students not also majoring in the College of Business should seek permission from the IROM Department (where MIS resides) to take this course.