CM2 – Financial Engineering & Loss Reserving (Theory + Excel Modelling)

Master financial mathematics, stochastic modelling, and reserving techniques with practical Excel application.

 Course Overview

CM2 equips actuarial students with the skills to apply mathematical and statistical techniques in financial markets and insurance reserving. The course includes:

•  CM2A: Financial mathematics & stochastic modelling
•  CM2B: Practical Excel modelling for simulations, option pricing, and loss reserving

Aligned with IAI (India) and IFoA (UK) exam patterns, this course builds expertise in financial economics essential for actuarial practice.

 What You Will Learn

 CM2A – Theory (Financial Economics)

• No-arbitrage pricing and financial market models
• Options and derivative pricing using Black-Scholes and binomial models
• Interest rate models (e.g., Vasicek, CIR models)
• Stochastic investment and asset-liability modelling
• Reserving methods for life and general insurance
• Risk-neutral valuation and simulation techniques

 CM2B – Excel Modelling (Practical Application)

• Simulating stock prices & option prices in Excel
• Building binomial trees for pricing derivatives
• Modelling stochastic processes
• Applying loss reserving techniques using spreadsheet tools
• Automating calculations for valuation of financial products

 Why Choose CM2?

• Develops skills to model and value financial instruments
• Builds foundation for future actuarial roles in investments, pensions, general insurance
• Enhances technical ability to use Excel for practical simulations
• Complements CM1 and CS1 knowledge for a well-rounded actuarial toolkit

 Applications of CM2 Knowledge

• Valuation of options, futures, swaps, and other derivatives
• Asset-liability management for insurers and pension funds
• Reserving and capital requirement assessments
• Risk management and hedging strategies

 Exam Structure

 Passing Criteria

 S MONK Tips to Crack CM2

• Master stochastic processes & no-arbitrage pricing theory
• Practice Excel simulations daily with real market scenarios
• Focus on understanding formulas + application, not just memorisation
• Solve S MONK mock papers to test speed & accuracy

 Course Fee Breakdown

 Who Can Join?

 Any actuarial student preparing for CM2 (IAI or IFoA)

 Graduates from math, statistics, finance, or engineering backgrounds

 Anyone with basic Excel skills and an interest in financial modelling