Free GARP FRM-Part-1 Exam Questions

Regarding the conditions for model selection criteria to demonstrate consistency, which of the following statements is true?I. The most consistent selection criteria with the greatest penalty factor for degrees of freedom is unbiased mean squared error.II. If we consider the fact that the true model may be much more complicated than the models under consideration, then the Akaike information criterion (AIC) measure should be examined.

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?

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?

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?

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: