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 02, 2026

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Question 1

Which of the following statements regarding securitization is least accurate?

A : Securitization enabled the originate-to-distribute banking model.

B : Securitization enables an originating institution to transfer the default risk of the underlying pool of assets.

C : Securitization may allow institutional investors to indirectly hold assets that they are prevented from holding directly.

D : Securitization gives originating banks greater incentive to approve and monitor loans carefully.

Answer: D

Question 2

A fund holds $10 million nominal of the XYZ 5.5% 30-year bond. It enters into a one month dollar roll with arepo dealer bank in which it sells the security at a price of 100-08 and buys it back at a forward price of par.Assuming that the security experiences a 2% paydown (scheduled principal plus prepayments) during the term ofthe trade, estimate the value of the drop.

A : $25,000

B : $225,000

C : $200,000

D : $800,000

Answer: B

Question 3

Portfolio A has total assets of $14 million and an expected return of 12.50 percent. Historical VAR of the portfolio at 5 percent probability level is $2,400,000. What is the portfolio's standard deviation?

A : 14.65%.

B : 15.75%.

C : 12.50%.

D : 17.97%.

Answer: D

Question 4

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 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: Apr 02, 2026

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