MODULES

Aim
The aim of the Investment and Asset/Liability Management course is to provide actuarial trainee with the economic background to the behavior of investment markets, and understanding of the principles of investment, particularly having regard to the corresponding liabilities and the risk profile of the investor, and a knowledge of the actuarial methodology for valuing investments for different purposes and for measuring investment performance.

Objectives
On completion of the module trainee actuary will be able to:

• describe what is meant by GNP and GDP, show how these concepts may be useful in describing the economy and in making comparisons between countries, and discuss these limitations,
• describe how the propensity to save or to consume by the private sector or the corporate sector affects the economy,
• state the major factors which have to be taken into account in the management of a country’s economy,
• describe the structure of public sector finances of an economy,
• describe the impact of fiscal and monetary policy, and other forms of government intervention, on different aspects of economy, in particular on financial markets,
• describe the major factors affecting the rate of inflation, the level of unemployment, and the rate of economic growth in the economy of an industrialized country,
• discuss the role of exchange rates and international trade in the management of the economy, the meaning of term ‘balance payments’ and how these factors affect financial markets,
• understand the importance and the limitations of prices determined by the market, from the perspective of an institutional investor,
• apply actuarial techniques to value different types of investment and financial instrument, in particular bonds, equities and property, with a view to ensuring consistency with the value to be placed on the corresponding liabilities,
• analyze the performance of an investment portfolio,
• discuss the value of portfolio measurement techniques and their limitations,
• apply actuarial techniques to develop an appropriate investment strategy which takes into account the characteristics of the liabilities,
• analyze the investment needs of an institutional investor,
• analyze the factors to be taken into account in selecting between particular investments and financial instruments for an individual or institutional investor.