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: Feb 10, 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

A market risk analyst at a regional bank is calculating the annual VaR of portfolio of investment securities. The portfolio has a current market value of USD 3,700,000 with a daily variance of 0.0004. Assuming there are 250 trading days in a year and the daily portfolio returns are independent and follow the same normal distribution with a mean of zero, what is the estimate of the 1-year VaR at the 95% confidence level?

A : USD 1,924,720

B : USD 2,721,519

C : USD 38,494

D : USD 121,730

Answer: A

Question 3

In the context of stress testing principles for banks, which of the following statements is correct regarding wrong-way risk? Wrong-way risk emerges when: there are changes in basis between the opening and closing of a futures

A : market conditions.

B : a company purchases an option on its own stock. the probability of default of counterparties increases as a result of general

C : a decline in an asset value may dry up its liquidity.

D : position.

Answer: A

Question 4

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 5

One of the basic requirements of a risk control process that a risk and control selfassessment program (RCSA) fails in is the:

A : expert opinion of managers.

B : ongoing assessment of the e ectiveness of risk management activities.

C : independent veri cation of risk identi cation and measurement.

D : identi cation of expected losses.

Answer: C

Page: 1 / 107

Total 533 Questions | Updated On: Feb 10, 2026

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