Financial Mathematics for Actuaries

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This book provides a thorough understanding of the fundamental concepts of financial mathematics essential for the evaluation of any financial product and instrument. Mastering concepts of present and future values of streams of cash flows under different interest rate environments is core for actuaries and financial economists. This book covers the body of knowledge required by the Society of Actuaries (SOA) for its Financial Mathematics (FM) Exam. The third edition includes major changes such as an addition of an “R Laboratory” section in each chapter, except for Chapter 9. These sections provide R codes to do various computations, which will facilitate students to apply conceptual knowledge. Additionally, key definitions have been revised and the theme structure has been altered. Students studying undergraduate courses on financial mathematics for actuaries will find this book useful. This book offers numerous examples and exercises, some of which are adapted from previous SOA FM Exams. It is also useful for students preparing for the actuarial professional exams through self-study.

Table of Content


Chan Wai Sum


Graduated from the Chinese University of Hong Kong with a major in Accounting and a minor in Statistics. He pursued a doctorate in Applied Statistics at the Fox School of Business Management, Temple University (Philadelphia, USA), receiving his PhD in 1989. He qualified as a Fellow of the Society of Actuaries in 1995 and Chartered Enterprise Risk Analyst in 2008. He was conferred an Honorary Fellow by the Institute and Faculty of Actuaries in 2014. Dr Chan held teaching and research posts at the National University of Singapore, the University of Waterloo and the University of Hong Kong before his present appointment as Professor of Finance at the Chinese University of Hong Kong. Dr Chan’s research interests include Health Care Financing, Actuarial Modeling and Financial Econometrics. He has had over 120 scientific articles published in scholarly journals. Dr Chan has been teaching financial and actuarial courses since 1992.

Yiu-Kuen Tse


Graduated from the University of Hong Kong, majoring in Economics and Statistics. He obtained his MSc in Statistics and PhD in Econometrics from the London School of Economics. He has been a Fellow of the Society of Actuaries since 1993. Dr Tse's research interests are in Empirical Finance and Financial Econometrics. He is Professor of Economics at the School of Economics, Singapore Management University. He has published extensively in scholarly journals and is the author of the book Nonlife Actuarial Models: Theory, Methods and Evaluation. Dr Tse teaches actuarial science and data science courses.