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The text covers the basic mathematical theory of interest as traditionally developed. The book is a thorough treatment of the mathematical theory and practical applications of compound interest, or mathematics of finance. The pedagogical approach of the second edition has been retained in the third edition. The textbook narrative emphasizes both the importance of conceptual understanding and the ability to apply the techniques to practical problems. The third edition has considerable updates that make this book relevant to students in this course area.
Customer Book Reviews There may be better options. By Aaron Rutledge on May 31, In order to save the reader some time I have condensed the information contained in the twenty previous reviews to the bare essentials. The book is poorly written. Almost everyone, including me, agrees.
The author does not have a way with words, he does not know how to motivate the material and he often chooses the most confusing and roundabout way of explaining the concepts if he explains them at all. Furthermore, the notation can be quite confusing. He is not consistent with his variables. The book focuses on theory. Expect to spend your time following proofs and derivations of formulas. The problem sets in the book focus on proofs and derivations.
Have a firm grasp on Calc 1, Calc 2 and all the algebra that is entialed because Kellison will not spend the time to spell out his proofs and derivations step by step. You need a supplement for working example problems. There are not enough computational problems in this book. Get a good manual that will prepare you specifically for the exams you are taking. Manuals will give you pointers about managing your time and can help you avoid common traps and pitfalls that arise during computations.
I recommend getting an Atex or ASM manual. Many people have passed the exams using only manuals. Very few people pass without doing lots of practice problems 5.
Others have passed the exam by using only this book. So it seems that this book is sufficient, but not necessary for preparing for the exam. Ultimately, you must be the judge. WHile it is certainly true that if you master this book you will be rewarded by a rich understanding of the theory of interest my personal recommendation for those studying for the exams is to devote most of your time and energy to practice problems. I would recommend using this book to flesh out your understanding as you go.
By Lap on Nov 08, I believe most of the readers of this book are studying for the actuarial course 2 exam. I am pretty strong in math myself, and I was truly amazed how poorly the author presented the ideas. Ended up I checked out another book called "Mathematics of Finance" by Cissell published in thank Eduardo for his suggestion. The fact is, only 3 basic techniques and a handful of 10 formulas or so are sufficient to tackle the exam.
The rest is to work on more practice questions. I am writing this review to warn those of you who are having a hard time studying this book. There is a much better choice out there, even it is a year-old book. I am giving it a 2-star instead of 1 for the "accuracy" presented in the book. This book, the sample test on the website, and my BA II Plus calculator got me through the new exam 2 with a 9.
The material is there. I just worked through all of the exercises in the book for the sections that were in the exam syllabus. Sometimes I could do the exercise the second time through. Sometimes I just gave up.
Close to exam time, I put Kellison aside and worked through the sample exam on the SOA website over and over until I had the problems almost memorized.
You definitely need the sample exam, or sample problems, or something besides just this book though. This book has the material in it, but the feel for the problems and test-taking strategies have got to come from somewhere else. The problems in Kellison are relatively tough and theoretical compared to the exam.
While Kellison can present the material to do well on the exam, he is not really so good at helping you understand it. For example, the concept of discount is still something of a mystery to me on a gut level. I eventually decided to learn it purely as a function of interest, a concept I grasp very well, but some friendly hints from Kellison would have been helpful.
In fact a more friendly, warm tone from Kellison in general would have been helpful. It is not user-friendly. The advanced stuff in chapter 9 is pretty much a waste, especially immunization. I would suggest ignoring chapter 9 totally, except for what you need to do the sample exam, and just make sure you really understand the other stuff.
Excellent book For students who need supplementary material, I would recommend a good mathematics of finance textbook such as the later editions by Cissell, et al. Also, a must read in connection with this subject is regulation Z of the Truth-in-Lending Act.
Study these materials and you will never have the wool pulled over your eyes by your friendly local banker, real estate broker, car finance company, loan shark, or rent-to-own furniture dealer. So this subject is all about learning the definitions and procedures and applying them to problem solving. That said, I have never, ever, EVER had anything close to this much trouble with a mathematics course in my life, simply because I could not understand this textbook.
As a highly detailed and analytical person, I rely heavily on the textbook to learn any subject. I expect to be taught the subject in a clear, comprehensive, logically sequenced manner, free of ambiguity and clutter. I expect to be given challenging problems free of ambiguity and confusing language.
I expect the preceding chapter to prepare me for those problems. This is the biggest train wreck of a math book I have ever read. Ambiguities abound. He convolutedly waxes poetic on inconsequential "observations" for PAGES you can sense him giving himself a huge pat on the back for his scholarly flights of fancy while leaving you frustrated to tears trying to find and decode basic explanations and definitions. The combination of poor, confusing discourse followed by ambiguous, confusing problems is a potent punch that will seriously discourage even the best of students.
My college professor actually called this book, and I quote, "revolting. Decent By Salviati on Dec 13, The Kellison book has its advantages and disadvantages, but it depends on what your objective is.
Granted that these subjects might be beyond the scope of the text. The very best there is for Exam FM By Kapil Chhabria on Jun 29, A number of aspiring actuaries who attempt to pass the second exam Exam FM: Financial Math attempt to side step the reading of this over priced textbook and substitute it with study aides and other cram books. I would recommend that they refrain from doing so as this text is lucid, the exercises are quite comprehensive, and above all, the occasional examples are rather identical to the problems one can anticipate on the test.
I took Exam FM recently and this is the only text i refered to, and i felt that my preparation was rather complete thanks to a reading of the syllabus material. The book flows like water, though chapter 4 section 4. Once this study is complete, the material presented in section 4. One and Two hundred level examples, level exercises A Customer on Feb 26, I too am using this book for a class graduate level credit.
I find it extremely frustrating to perfectly understand the examples given too few in my opinion only to find the exercises have gone off in totally different directions with one, two and sometimes three twists and turns thrown in to complicate matters. Exercises need to lead you to the complications, not begin with them.
It still haunts the deepest parts of my mind. Essentially when I read something vile and wretched on Reddit, I think of this book. But I never think about this book when it comes to happiness. Patient and thourough but too dense for most By Mark A. Menzie on Oct 20, This text has everything you could possibly want to know about present value, future value, annuities certain, bond amoritization and virtually any subject in mathematical finance.
It throws one new symbol after another at you and if you want to make it through the text you have to gobble them all up. For an actuarial candidate the alternate text by Parmenter Theory of Interest, Life Contingencies, and Pension Applications offers a more manageble option and gives an introduction to higher level subject matter to boot. Not as helpful as other material By Frenchie on Oct 16, This text is not very helpful at all.
I used it in my Interest Theory class and started to use it for Course 2 exam, but both times came out confused. Luckily, in school, I had a great professor who did not bother using it as a teaching tool, rather as a source for homework problems. He used his own material to actually teach us the concepts. As for studying for Course 2, you will do much better using one of the manuals, such as Actex or BPP.
A bit wordy at times.. I am a mathematician, and have no complaints about the mathematics in the book. The theory presented within is mathematically sound.
However, the presentation was found wanting. To give just a few examples of why this book does a poor job of teaching the concepts: Lack of motivation. Every topic should start with some sort of motivating example. Given that the theory of interest has myriad applications, I find it difficult to understand why the author chose not to use a single example of why a particular topic is relevant to the real world.
Chapter 1 starts off section 1. With this already laid out, introducing the accumulation function becomes very natural. The author introduces terms that "is not intuitively clear" e.
9780073382449 - The Theory of Interest by Kellison, Stephen
Stephen Kellison Theory Of Interest 3e
Solution manual on the Theory of Interest 1 to 3 edition by Kellison
ISBN 13: 9780073382449