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: Mar 08, 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

Robert Patterson, an options trader, believes that the return on options trading is higher on Mondays than on other days. In order to test his theory, he formulates a null hypothesis.Which of the following would be an appropriate null hypothesis? Returns on Mondays are:

A : less than returns on other days.

B : not less than returns on other days.

C : not greater than returns on other days.

D : greater than returns on other days.

Answer: C

Question 3

Which of the following liquidity de nitions is most likely associated with funding liquidity?

A : The length of time it will take an asset to regain its price after the price has fallen temporarily.

B : The loss that would be sustained by a trader who sells an asset and then immediately buys it back.

C : The number of units of an asset a trader can buy or sell at the current market quote (bid and ask prices).

D : The risk that investors may not be able to roll over short-term debt to nance the purchase of an asset.

Answer: D

Question 4

A risk manager at an investment bank is examining the forward and futures contracts the bank’s clients use as hedging instruments. The manager compares the way the two types of contracts are priced, how profits and losses are calculated, and how decisions to offset or deliver against the contracts are made. Which of the following statements is correct?

A : When the price of an asset is positively correlated with interest rates, the forward contract will typically have a higher price than the futures contract.

B : The daily profit and loss on forward and futures contracts differ, since futures contracts realize profits and losses each day while forward contracts realize them at maturity.

C : Prices on similar forward and futures contracts will be the same due to the no-arbitrage relationship between forwards and futures.

D : If interest rates are higher than the income generated by a financial asset, delivery of the asset against the futures contract will take place on the latest date possible.

Answer: B

Question 5

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

Page: 1 / 107

Total 533 Questions | Updated On: Mar 08, 2026

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