Financial Mathematics (FM) Textbook


Interest Theory: Financial Mathematics and Deterministic Valuation



This text provides a comprehensive explanation of the required interest theory material on the Financial Mathematics (FM) Exam offered by the Society of Actuaries and the Casualty Actuarial Society.  The concise explanations in this textbook fully prepare the students for the questions that appear on the FM Exam.  Key Concepts are identified throughout the text for easy reference while working practice problems. 

This book contains over 300 end-of-chapter questions that are written in the style of the multiple choice questions on the FM Exam.  Each question has a difficulty rating that can be found at the end of the textbook along with the answer to the question.  Fully worked solutions are available as a free download below. 

The solutions contain step-by-step instructions that demonstrate the quickest and most effective use of the BA-II Plus calculator.

This second edition of this textbook is a suggested textbook for the Exam FM Learning Objectives by the Society of Actuaries. The first edition is also a suggested textbook. Both editions can be used to prepare for the FM exam.

The second edition incorporates the topics covered by the SOA's three study notes, including the following: interest rate determinants, defaults, inflation, T-bills, corporate bonds, first-order Macaulay approximations, and the U.S. banking system.

The first edition of this textbook, in combination with the three SOA study notes, can still be used to prepare for the FM exam.


How to Order the Textbook


The second edition can be ordered from the Actuarial Bookstore or Actex as a printed textbook, digital edition, or a combination of both.


Missing Pages

A few textbooks are missing pages. They can be downloaded using the following links.

Pages 49-50

Pages 95-96

Page 204



The errata to the second edition was updated on 11.23.21.




The solutions to the second edition can be found below:

Solutions to Chapters 1 - 5      [Updated 06.07.22]

Solutions to Chapters 6 - 10    [Updated 06.07.22]

Solutions to Chapters 11 - 13   [Updated 06.07.22]

Solutions to Chapters 14 - 15   [Updated 06.07.22]

Solutions to Chapters 16 - 18   [Updated 06.07.22]




FM Practice Exams


Set of 3 FM Practice Exams Summary

The key to passing an actuarial exam is to practice working exam-style questions.  Certainly, SOA Course FM is not an exception to this rule.  The ActuarialBrew Set of Three FM Practice Exams helps you to focus on the material that is likely to be tested.  By taking a practice exam under exam conditions, students can determine their strengths and weaknesses, which allows them to focus on the areas where improvement is most needed before the exam day arrives.

Each of our three FM Practice Exams has 35 exam-style questions and is designed to mimic the actual exam experience.  The ActuarialBrew Set of 3 Practice FM Exams gives students the exam-taking practice necessary to build confidence for success on exam day.

The Practice Exams are formatted like the actual FM exam.  The Practice Exams should be taken under exam conditions to help students best prepare for the actual FM exam. 


How to Order the Practice Exams


2018 Edition

The 2018 edition of our Set of 3 FM Practice Exams is for the October 2018 exam cycle and later cycles. It can be ordered as printed exam booklets or as an electronic product.

The 2018 edition of our Set of 3 FM Practice Exams can be ordered from the Actuarial Bookstore or Actex.



Solutions to Practice Exams

Solutions to the FM Practice Exams: 2018 edition

Solutions to FM Practice Exam #1

Solutions to FM Practice Exam #2

Solutions to FM Practice Exam #3

For prior editions of the FM Practice Exam Solutions, please visit the FM Archives page. 




Free email support for these Practice Exams is provided to students who purchase our Set of 3 FM Practice Exams.  We are committed to provide quick responses to the questions we receive because we are dedicated to help our customers pass the exam.



SOA FM Website

To visit the SOA's FM website, click here.



Helpful FM Links

For more information about the FM Exam, click here.


Online Sample Exam


Interest Theory Sample Questions and Solutions

ActuarialBrew Solutions to Interest Theory Sample Questions


TI BA-35 Calculator Functions

TI BA II Plus Calculator Functions

Practice Questions Videos and Solutions


Past Exams and Solutions 

November 2005 SOA Exam FM/2 Questions

November 2005 ActuarialBrew FM Solutions

November 2005 SOA Exam FM/2 Solutions


May 2005 SOA Exam FM/2 Questions

May 2005 ActuarialBrew FM Solutions

May 2005 SOA Exam FM/2 Solutions


Other FM Links 

SOA Candidate Resources

SOA Candidate Connect e-Newsletter