Free GARP FRM-Part-1 Exam Questions

Become GARP Certified with updated FRM-Part-1 exam questions and correct answers

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Total 533 Questions | Updated On: Jan 28, 2026

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Question 1

A bank has entered into a 3 x 6 forward rate agreement to receive a xed rate of 3.35 percent on $12 million in six months. If the applicable rate in three months is 3.62 percent, the cash ow associated with this forward rate agreement for the bank would be closest to:

A : $16,200.

B : −$32,400.

C : −$8,100.

D : $32,400.

Answer: C

Question 2

At-the-point approaches tend to be:

A : neither counter- nor procyclical because they rarely change.

B : procycyclical.

C : countercyclical.

D : neither counter- nor procyclical because they change randomly.

Answer: B

Question 3

A senior analyst at a financial institution is giving a presentation to a group of junior analysts on the features of the power law and its uses. The senior analyst notes that the power law is particularly important in understanding the tails of distributions. Which of the following is correct regarding the power law?

A : The power law specifies the probability of observing a value greater than a given value.

B : Power law tails are only observed in normal distributions.

C : The power law models the slow decline in the probability of observing large values in thin-tailed distributions.

D : Power law tails are not present in the Student’s t distribution.

Answer: A

Question 4

An analyst is estimating whether a fund's excess return for a quarter is related to interest rates and last quarter's excess return. The regression equation is found to have unconditional heteroskedasticity and serial correlation. Which of the following is most accurate? Parameter estimates will be:

A : accurate and statistical inference about the parameters will be valid.

B : inaccurate but statistical inference about the parameters will be valid.

C : inaccurate and statistical inference about the parameters will not be valid.

D : accurate but statistical inference about the parameters will not be valid.

Answer: C

Question 5

One of the basic requirements of a risk control process that a risk and control selfassessment program (RCSA) fails in is the:

A : expert opinion of managers.

B : ongoing assessment of the e ectiveness of risk management activities.

C : independent veri cation of risk identi cation and measurement.

D : identi cation of expected losses.

Answer: C

Page: 1 / 107

Total 533 Questions | Updated On: Jan 28, 2026

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