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: Feb 18, 2026

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Question 1

Suppose you have a two-security portfolio containing bonds A and B. The book value of bond A is $20 and the market value is $35. The book value of bond B is $40 and the market value is $50. The duration of bond A is 4.7 and the duration of bond B is 5.9. Which of the following amounts is closest to the duration of the portfolio?

A : 5.3.

B : 5.6.

C : 5.4.

D : 5.5.

Answer: C

Question 2

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 3

A Swiss chemical company is considering issuing bonds to finance its planned expansion. A risk analyst involved in the capital raising program at the company is studying the external agency rating process to gain a better understanding of the implications of agency ratings for the firm’s financing plans. Which of the following statements is correct?

A : Rating agencies produce point-in-time ratings, as these are designed to provide the best current estimate of future default probabilities.

B : Rating agencies provide outlooks to indicate the potential for a change in rating in the short-term, and use watchlists to indicate medium-term changes.

C : Empirically, changes in bond and stock prices tend to be greater in cases of ratings downgrades than ratings upgrades.

D : Agency ratings tend to produce identical default rates for companies in the same industry but located in different countries.

Answer: C

Question 4

A risk analyst at an asset management company is assessing the past performance of an internally managed equity fund. The analyst obtains the following information on the market and the fund over the last year:• Treynor performance index for the fund: 8.00%• Return of the market portfolio: 5.60%• Beta of the fund: 0.65• Risk-free rate of interest: 1.75%Based on the information above, what is the Jensen’s alpha for the equity fund over the same period?

A : 2.70%

B : 4.15%

C : 2.40%

D : 3.69%

Answer: A

Question 5

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

Page: 1 / 107

Total 533 Questions | Updated On: Feb 18, 2026

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