Actuary Certification Cheat Sheet 2026

The 30 highest-yield Actuary Certification facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. Which actuarial concept measures the expected loss for an insurer net of a proportional reinsurance cession of fraction α? → (1−α)·E[S]
2. A bond with a 6% coupon rate is trading at a premium. Which statement must be true? → The yield to maturity is less than 6%
3. An insurer observes 200 losses from a policy. The maximum likelihood estimator for the mean of an exponential distribution is: → The sample mean X̄
4. In a traditional defined benefit plan valuation, the selection of a lower discount rate will generally: → Increase the actuarial accrued liability
5. Which of the following best describes the 'spot rate' approach for determining pension liability discount rates under ASC 715? → Applying individual zero-coupon bond rates matched to each expected benefit payment period
6. Under the normal power (NP) approximation for aggregate losses, the skewness of the aggregate distribution is used to: → Correct the normal approximation by accounting for asymmetry
7. Which of the following is the correct formula for the variance of a binomial distribution with parameters n and p? → np(1-p)
8. What is the primary purpose of professional certification in Probability Theory? → To validate competency and knowledge in the field
9. A credibility premium is computed as P = Z × 250 + (1−Z) × 200 = 230. What is the credibility factor Z? → 0.60
10. A compound Poisson frequency-severity model has aggregate loss S = X1 + X2 + ... + XN where N ~ Poisson(λ). The variance of S equals: → λ · E[X²]
11. In empirical Bayes non-parametric credibility, the EVPV (v) is estimated by: → The average within-risk sample variance across all risks
12. Why is continuing education important in Regulation? → To stay current with evolving standards and practices
13. In the Bühlmann-Straub model, the grand mean estimator μ̂ is computed as: → Σ(Zᵢ × X̄ᵢ) / ΣZᵢ
14. In a compound Poisson model where S has Poisson(λ) claim counts and exponential(θ) severities, the moment generating function of S is: → exp(λ(Mx(t) − 1))
15. An actuary working in enterprise risk management assigns a 99.5th percentile Value-at-Risk (VaR) to a risk. What does this measure represent? → The loss level exceeded only 0.5% of the time
16. Which regulatory body oversees the financial examination of life insurance companies in the United States? → State insurance departments
17. In life insurance, which reserve standard requires reserves to equal the present value of future benefits minus the present value of future net premiums? → Net Premium Reserve method
18. Under ERISA, a pension plan's actuary must certify the plan's funding status annually. Which metric determines whether a plan is in 'critical status'? → Funded percentage below 65% or projected insolvency within 5 years
19. In a multiple-decrement table, the total decrement qx(τ) represents: → The probability of leaving the group from any cause
20. Which property of a severity distribution ensures that the mean excess loss function e(d) is constant for all d? → Memorylessness of the exponential distribution
21. The concept of immunization in fixed-income portfolio management aims to: → Match the duration of assets and liabilities to protect against interest rate risk
22. Which credibility formula correctly expresses the full-credibility standard for claim counts when Z = 1 is desired? → n ≥ (z_α/2 / r)² × (1 + CV²)
23. The Appointed Actuary for a P&C insurer signs the Statement of Actuarial Opinion (SAO). The reserves opined upon must be: → Within a range the actuary finds reasonable, with the opinion noting any deficiency
24. A compound Poisson process has Poisson frequency λ and severity distribution F(x). What is the variance of aggregate losses? → λ·E[X²]
25. If the demand for a good increases and the supply remains unchanged, what happens to the equilibrium price and quantity? → Price increases, quantity increases
26. What is the value of |−7|? → 7
27. A plan amendment retroactively increases benefits for past service. Under ASC 715, this creates: → Prior service cost amortized over the future service of affected active employees
28. Under the Gordon Growth Model, if a stock pays a dividend of $3, the required return is 10%, and dividends grow at 4%, what is the stock's intrinsic value? → $50.00
29. What is the perimeter of a rectangle with length 8 and width 5? → 26
30. For a continuous uniform distribution on [a, b], what is the variance? → (b-a)²/12