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 20, 2026

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Question 1

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 2

Which of the following is not a reason to accumulate loss data?

A : Past losses are almost always repeated in the future.

B : It focuses management attention on the magnitude and e ect of risk.

C : It provides data necessary for empirical analysis.

D : It contributes to the understanding of future expected losses.

Answer: A

Question 3

Jayce Arnold, a CFA candidate, is studying how the market yield environment a ects bond prices. She considers a $1,000 face value, option-free bond issued at par. Which of the following statements about the bond's dollar price behavior is most likely accurate when yields rise and fall by 200 basis points, respectively? Price will:

A : increase by $124, price will decrease by $149.

B : increase by $149, price will decrease by $124.

C : decrease by $124, price will increase by $149.

D : decrease by $149, price will increase by $124.

Answer: C

Question 4

Which of the following is not a reason to accumulate loss data?

A : Past losses are almost always repeated in the future.

B : It focuses management attention on the magnitude and e ect of risk.

C : It provides data necessary for empirical analysis.

D : It contributes to the understanding of future expected losses.

Answer: A

Question 5

Bonds rated B have a 25% chance of default in five years. Bonds rated CCC have a 40% chance of default in five years. A portfolio consists of 30% B and 70% CCC-rated bonds. If a randomly selected bond defaults in a five-year period, what is the probability that it was a Brated bond?

A : 0.250.

B : 0.429.

C : 0.625.

D : 0.211.

Answer: D

Page: 1 / 107

Total 533 Questions | Updated On: Apr 20, 2026

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