Free GARP FRM-Part-2 Exam Questions

Become GARP Certified with updated FRM-Part-2 exam questions and correct answers

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Total 503 Questions | Updated On: Jan 13, 2026

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Question 1

Which of the following statements is not a motivation for pricing counterparty risk?

A : Counterparty risk pricing should account for risk mitigants.

B : Pricing bilateral derivatives contracts.

C : Best practices organize pricing responsibilities in the organization.

D : Accurate pricing should only account for the cost of the trade.

Answer: D

Question 2

What is the impact on the bond price-yield curve if, all other factors held constant, the maturity of a zero-coupon bond increases? The pricing curve becomes:

A : more concave.

B : less concave.

C : less convex.

D : more convex.

Answer: D

Question 3

The Bureau of Labor Statistics has just reported an unexpected short-term increase in high-priced luxury automobiles. What is the most likely anticipated impact on a mean-reverting model of interest rates?

A : The economic information is long-lived with a low mean reversion parameter.

B : The economic information is long-lived with a high mean reversion parameter.

C : The economic information is short-lived with a high mean reversion parameter.

D : The economic information is short-lived with a low mean reversion parameter.

Answer: C

Question 4

Which of the following measures is most likely an example of a dynamic financial correlation measure?

A : Pairs trading.

B : Copula correlations for collateralized debt obligations (CDOs).

C : Binomial default correlation model.

D : Value at risk (VaR).

Answer: A

Question 5

Which of the following statements best describes the benefit of netting risk exposures?The benefits of netting are realized when:

A : marked-to-market (MtM) values have opposite signs for two trades.

B : expected exposure (EE) values are minimal.

C : marked-to-market (MtM) values have high structural correlations for two trades.

D : expected future exposure (EFE) values have zero correlation.

Answer: A

Page: 1 / 101

Total 503 Questions | Updated On: Jan 13, 2026

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