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 16, 2026

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Question 1

An analyst applying a reinforcement learning model has assigned a probability to exploitation of 65%. As she completes more trials, she can reasonably expect that the probability will increase above:

A : 65% for exploitation.

B : 50% for exploitation

C : 50% for exploration.

D : 35% for exploration.

Answer: A

Question 2

An analyst is regressing fund returns against the return on the Wilshire 5000 to determine whether beta is equal to 1.0. The analyst is trying to determine whether the number of observations should be increased. Which of the following is a reason why the test will have higher power if the number of observations is increased? The:

A : standard error of the regression will be lower.

B : constant of the regression will be closer to zero.

C : estimate of beta will be farther away from 1.0.

D : mean squared error of the regression will be lower.

Answer: A

Question 3

The board of directors of a growing asset management company is conducting a review of the firm’s approach to risk management. The board concludes that the firm should establish an ERM framework. Which of the following represents a key benefit that the firm will likely attain after establishing an ERM framework?

A : Allowing the company to determine and make use of a higher risk appetite

B : Finding the optimal reporting methodology for each risk function

C : Taking advantage of the new opportunities that create value on a standalone basis

D : Improving the top-down communication and coordination in the company

Answer: D

Question 4

Sue Johnson, FRM, has an elderly client with a very large asset base. The client intends to start divesting her fortune to various charities. Johnson is on the Board of a local charitable foundation. Johnson most appropriately:

A : should solicit the client herself, along with other Board members, to obtain a larger contribution.

B : can discuss her client's situation with the charitable foundation as long as she informs other local charities of her client's intentions.

C : must not discuss anything regarding her client and her client's intentions with the charitable foundation without permission.

D : can make this known to the charitable foundation so that they can solicit the client, since it is the client's wish to divest assets to charities in the future.

Answer: C

Question 5

Call and put option values are most sensitive to changes in the volatility of the underlying when:

A : calls are deep out-of-the-money and puts are deep in-the-money.

B : both calls and puts are at-the-money.

C : both puts and calls are deep out-of-the-money.

D : both calls and puts are deep in-the-money.

Answer: B

Page: 1 / 107

Total 533 Questions | Updated On: Apr 16, 2026

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