Rate Conversions
Free SOA Exam FM (Financial Mathematics) lesson in Time Value of Money. 12 min read, ~1,800 words.
Two-step algorithm: convert any rate to first, then convert to the target. Works for every pair. Ordering: for all. Instant sanity check. Key identity:. Discount rate is always less than interest rate. Convergence: as, both and. Pure conversions are free points if the two-step algorithm is memorized.
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- 1c
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