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 20, 2026

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Question 1

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

Question 2

Using the Black-Scholes model, compute the value of a European call option using the following imputs:Underlying stock price: $100Exercise price: $90Risk-free interest rate: 5%Volatility: 20%Dividend yield: 0%Time to expiration: one yearThe Black-Scholes call option price is closest to:

A : $15.33.

B : $13.65.

C : $16.71.

D : $17.99.

Answer: C

Question 3

Regarding the relationship between a rm's risk appetite and its business strategy, which of the following statements is true?

A : Business planning activities that exceed risk appetite should be maintained.

B : Consideration must be given to the downside risks of only risky business strategies.

C : Business strategy planning meetings require input from the risk management team.

D : A rm’s risk appetite re ects its ability to minimize risk.

Answer: C

Question 4

Given the spot rates for the 6-month and 1-year maturing bond, the 6-month forward rate 6 months from now is closest to:

A : 7.28%.

B : 6.54%.

C : 5.86%.

D : 6.04%.

Answer: B

Question 5

The CRO of a bank is evaluating the bank’s practices for the management of risk data. The CRO notes that in characterizing various dimensions of the bank’s data, the Basel Committee has suggested several principles to promote strong and effective risk data aggregation capabilities. Which statement correctly describes a recommendation that the bank should follow in accordance with the Basel Committee’s principles for effective risk data aggregation and risk reporting?

A : The completeness principle recommends that a financial institution capture data on its entire scope of material risk exposures.

B : The integrity principle recommends that data aggregation be completely automated without any manual intervention.

C : The adaptability principle recommends that a bank frequently update its risk reporting systems to incorporate changes in best practices.

D : The governance principle recommends that the risk data be reconciled with management’s rough approximations of risk exposure prior to aggregating the data.

Answer: A

Page: 1 / 107

Total 533 Questions | Updated On: Apr 20, 2026

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