Verified solution · Exam FM
This Exam FM sample reference tests Cost of an Exactly Matched Bond Portfolio. Matching the one-year liability requires 1500/1030 units of the coupon bond, costing 1481.72 and producing 43.69 at six months. A six-month zero supplies the remaining early liability for 1922.66, so total cost is 3404.39 and choice B.
Independent solution
Setup
Price a 1000-face one-year coupon bond at the 2.1% half-year yield.
Model
Choose its face scale to match the year-1 liability exactly.
Compute
A six-month zero must supply the remainder of the earlier liability.
Answer
The dedicated portfolio costs 3404.39, choice B.
Continue without hunting through PDFs
The searchable 2210-page manual includes this complete solution, its error analysis, and one original worked variant for every active reference.
Error diagnosis
These notes identify the calculation error associated with each wrong letter when that error is reproducible.
Original practice · fully worked
A liability pays 1,000 after six months and 2,000 after one year. Available assets are six-month zeroes yielding 3% nominal convertible semiannually and one-year par bonds with 4% nominal coupons and 5% nominal yield, both convertible semiannually. Find the cost of an exactly matched portfolio.
The one-year bonds cost 1941.89 and contribute 39.22 at six months. Discounting the remaining early liability costs 946.59, for total cost 2888.47 and choice C.
Setup
Price a 1000-face one-year bond using 2.5% per half-year.
Model
Scale its final payment to the 2000 year-1 liability.
Compute
Supply the six-month residual with zeroes discounted at 1.5%.
Answer
The exact-match cost is 2888.47, choice C.
Keep practicing
These references share syllabus concepts or sit nearby in the official sequence. All 118 Exam FM general cash flows, portfolios, and asset liability management practice problems.
Continue in syllabus order
The 2210-page Financial Mathematics Proof Manual reorganizes 461 verified Exam FM solutions by syllabus skill and adds formula proofs, error patterns, and original worked practice.
ActuaryProof. “SOA Exam FM Sample Question #346 — Verified Solution.” Verified 2026-07-31.
Source reference: official SOA sample-question PDF. Last reviewed 2026-07-31.
