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: Jan 05, 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

An operational risk manager is presenting to a group of risk analysts about different techniques to model operational risk. An analyst asks the manager about the appropriate use of the power law in estimating operational losses. Which of the following would be a correct statement for the manager to make about the use of the power law?

A : It is suitable for modeling the tail of the operational loss distribution, but not for modeling the body of the distribution.

B : It implies that operational losses tend to follow a normal distribution.

C : It is more effective in modeling some types of operational risk, such as losses from fraud, than others, such as losses from natural disasters.

D : It is generally used to estimate routine operational losses which occur at a relatively high frequency.

Answer: A

Question 3

A put option on DCY stock matures six months from today and sells for $0.49. A call option on DCY stock with the same strike price sells for $4.52. Both the put and the call are European options. DCY stock is priced at $55 and the risk-free rate of interest is 4 percent.The strike price of the put and call options is closest to:

A : $53.

B : $52.

C : $50.

D : $51.

Answer: B

Question 4

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 5

As a research analyst, you're analyzing the probability that the prices of dollar will go below 72 after theupcoming budget. Suppose that the prices of dollar are uniformly distributed with a floor at Rs. 70 and a ceiling atRs. 75 imposed by the government, then what is the probability that the prices of gold will be set below 72?

A : 0.625

B : 0.425

C : 0.4

D : 0.815

Answer: C

Page: 1 / 107

Total 533 Questions | Updated On: Jan 05, 2026

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