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: Sep 15, 2024

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Question 1

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 2

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 3

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

Question 4

An analyst is using key rate shifts to model the term structure of interest rates. For key rates the analyst has chosen the 1-year, 7-year, and 20-year yields. The rate changes that will have an e ect on a 5-year bond are:

A : 1-year, 7-year, and 20-year.

B : 1-year and 7-year.

C : 1-year.

D : 7-year.

Answer: B

Question 5

Immunization is the process of o setting the e ects of interest-rate changes on the value of assets and liabilities. Coverage of liabilities with signi cant convexity may be more e ectively matched with a:

A : callable bond portfolio, especially in a declining-rate environment.

B : bullet portfolio with little convexity.

C : barbell portfolio with positive convexity.

D : mortgage portfolio, especially in a highly volatile rate environment.

Answer: C

Page: 1 / 107

Total 533 Questions | Updated On: Sep 15, 2024

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