SOA Exam IFM: Investment and Financial Markets Practice Test

The exam syllabus is divided into three core domains: Corporate Finance (30-40%), which covers capital budgeting, capital structure, and dividend policy; Derivatives Markets (40-50%), focusing on forwards, futures, swaps, and options; and Quantitative Investment Analysis (20-30%), which includes mean-variance portfolio theory, asset pricing models (CAPM), and market efficiency. The exact weighting can vary slightly by sitting, and candidates should always refer to the most recent SOA syllabus for precise details.

Exam IFM replaced Exam MFE in 2018. While it retains much of the derivatives and financial models content from MFE, IFM places a significantly greater emphasis on corporate finance principles (approximately 35% of the syllabus). This change reflects the evolving role of actuaries, requiring a more holistic understanding of how corporate financial decisions interact with market risks and investment strategies.

Exam IFM is a 3-hour computer-based test consisting of 30 multiple-choice questions. The passing score is set by the SOA's examination committee and is not a fixed percentage; it is a scaled score that reflects the difficulty of the specific exam sitting. Results are reported as pass/fail, though a numerical score is provided to unsuccessful candidates.

The SOA strongly recommends, and most candidates find it essential, to have first passed Exam P (Probability) and Exam FM (Financial Mathematics). A solid grasp of the calculus-based probability from Exam P and the time-value-of-money and interest rate concepts from Exam FM is crucial for understanding the models presented in IFM. Some knowledge of economics can also be beneficial.

The SOA provides a detailed syllabus and list of recommended texts. Most candidates utilize a combination of: 1) Manuals from major actuarial prep companies (ACTEX, ASM, Coaching Actuaries), which condense and explain the material; 2) The referenced textbooks (e.g., McDonald's 'Derivatives Markets', Berk/DeMarzo's 'Corporate Finance') for deeper understanding; and 3) Extensive practice with sample questions and past exams to build speed and problem-solving technique.