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: Apr 28, 2026

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Question 1

Suppose a bond with a par value of 1000 has coupon payments of 10% per annum and a yield to maturity of5%. If the bond has 4 years to maturity, what is the price of the bond?

A : 904.97

B : 841.51

C : 3628.22

D : 1177.3

Answer: D

Question 2

A risk analyst uses the bootstrap method to assess the market risk of a global equity portfolio that experienced significant volatility in the recent past. The analyst applies independent and identically distributed (IID) bootstrapping to the extracted standardized residuals of the fitted model, and these bootstrapped standardized residuals are then used to generate time paths of future asset returns. In the final step, the simulated data is used to estimate the VaR of the global equity portfolio over a 1-month horizon. Which of the following will the analyst find to be correct when applying the IID bootstrap method?

A : The VaR estimates will be reliable because the IID bootstrap fully captures interdependencies in the observed asset return data.

B : The VaR estimates will be reliable because they are based on random values generated from an assumed distribution that is not affected by external events or time.

C : The VaR estimates will not be reliable because they are derived from the most current observations of the period that is characterized by higher volatility.

D : The VaR estimates will not be reliable because the IID bootstrap allows the possibility of future losses that are larger than those that have been realized in the past.

Answer: C

Question 3

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

Question 4

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 5

Regarding a xed-rate, level payment, and fully amortized mortgage loan, which of the following statements is false?

A : Each payment consists of an interest component and a principal component.

B : Payments are equal over the life of the loan.

C : Principal repayment falls as interest payments rise over the life of the loan.

D : Interest payments fall as principal payments rise over the life of the loan.

Answer: C

Page: 1 / 107

Total 533 Questions | Updated On: Apr 28, 2026

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