CM1: Corrections Page 1
Subject CM1
Corrections to 2020 study material
1 Comment
This document contains details of any errors and ambiguities in the Subject CM1 study materials
for the 2020 exams that have been brought to our attention. We will incorporate these changes
in the study material each year. We are always happy to receive feedback from students,
particularly details concerning any errors, contradictions or unclear statements in the courses. If
you have any such comments on this course please email them to CM1@[Link].
This document was last updated on 10 September 2020.
The Actuarial Education Company © IFE: 2020 Examinations
Page 2 CM1: Corrections
2 Paper A Course Notes
Chapter 3
Correction added on 1 June 2020
Page 19
The fifth paragraph on this page should refer to the effective rate of discount, not the effective
rate of interest.
Chapter 6
Correction added on 19 November 2019
Page 13
The solution to part (ii) of the question on this page should refer to the value of the rental
payments on 1 January 2018, not 1 January 2023.
Chapter 7
Correction added on 11 November 2019
Page 14
About halfway down the page, the s(p) term on the left hand side of the expression just after the
n
words “Again, using the formula for sn gives:” should have double dots over it, ie:
( 1 + i )n − 1
s (p)
=
n d (p)
Chapter 8
Correction added on 19 December 2019
Page 7
The y-axes of the graphs at the bottom of this page should be labelled “Rate of payment” rather
than “Amount”.
© IFE: 2020 Examinations The Actuarial Education Company
CM1: Corrections Page 3
Chapter 18
Correction added on 2 July 2020
Page 10
In the solution on this page, the first line of calculations after the word ‘So:’ should read as
follows:
1 1
( IA )50:10 ≈ (1 + i ) 2 ( IA )50:10 + 10 A 1
50:10
ie there should be no ‘bar’ on the increasing assurance after the ≈ sign.
Chapter 27
Alert added on 7 September 2020
Page 40
The question on this page requires the calculation of net premium reserves for a with-profits
policy. This type of calculation is not on the CM1 syllabus, however, students should be able to
calculate the required reserves with the following additional information:
• Net premiums do not include bonuses or expenses.
• Net premium reserves only account for bonuses that have already been declared. Any
future bonuses that have not yet been declared are excluded from the reserve
calculation.
3 Assignment X solutions
Solution X2.3
Correction added on 6 February 2020
The course reference box should say “Optional redemption dates are covered in Chapter 12,
Section 1.5” rather than Section 1.7.
Solution X3.5
Correction added on 2 July 2020
In the first line of the solution, the age on the deferred annuity should be 40 select:
D65
EPV annuity
= benefit 15,000
= 25 a[40] 15,000 a65
D[40]
The Actuarial Education Company © IFE: 2020 Examinations
Page 4 CM1: Corrections
4 Revision notes
Booklet 6
Correction added on 7 September 2020
The solution to part (i) of Question 10 in this booklet (Subject CT1 April 2011 Question 8) refers to
a fund’s liabilities being due in three years’ time and twenty years’ time. This should be three
years’ time and six years’ time.
Booklet 12
Correction added on 7 September 2020
The solution to Question 5 in this booklet (Subject CT5 September 2012 Question 14) shows a
table containing components of a policy’s profit vector. The death/survival cost for year 4 of this
policy should be £60,001 rather than £60,000 (both values are given to the nearest pound). This
is due to the death benefit being paid immediately on death rather than at the end of the year, ie:
d 1
60,000 ( aq )[30]+3 × (1.03) 2 + 60,000 ( ap )33 =
60,000.57
This means the profit vector for year 4 should be -£46,302 and the final NPV of the policy is
£886.59. The profit margin is still 1.96% to two decimal places.
5 Mock 1
Question 15
Correction added on 7 September 2020
The bond in this question pays coupons of 3% annually in arrears, but part (ii) of this question
incorrectly refers to coupons of 6% rather than 3%.
6 Mock 2
Question 16
Correction added on 10 September 2020
There is an issue with the life table in this question in that the value of d42 = 8 is inconsistent
with the values of l42 = 487 and l43 = 478 . The difference between these two values should
result in d42 = 9 . As a result of this inconsistency, the premium calculated using the lx values
alone is £1,846 rather than the £1,732 given in the question. The premium of £1,732 is calculated
using a combination of d x and lx values from the life table.
© IFE: 2020 Examinations The Actuarial Education Company
CM1: Corrections Page 5
7 Mock 3
Question 1
Correction added on 10 September 2020
The basis to use for this question has been omitted. This should be PFA92C20.
The Actuarial Education Company © IFE: 2020 Examinations
