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: Mar 26, 2026

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Question 1

The CRO at a bank wants to strengthen the bank’s capability to defend itself against emerging cyber-threats. To help achieve this goal, the CRO is assessing the current range of practices regarding the sharing of cybersecurity information between different types of institutions, as well as the potential benefits from sharing information. Which of the following statements would be most appropriate for the CRO to make?

A : Existing peer-sharing mechanisms among banks focus on the exchange of information related to cyber-security incidents, but such information is generally not shared from banks to regulators.

B : The scope and depth of information-sharing practices among banks may significantly vary between financial markets, depending on the level of trust among participating banks.

C : Information-sharing among different national regulators has evolved significantly over the past several years and is now a widespread practice at a large majority of jurisdictions.

D : The sharing of cybersecurity information among banks is less frequently observed and generally considered to be less effective than other cyber-security information-sharing practices.

Answer: B

Question 2

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 3

Which of the following statements most accurately reflects the time horizons typically used for market VaR and credit VaR calculations?

A : Market risk VaR is calculated over a longer time period than credit risk VaR.

B : Credit risk VaR is calculated over a longer time period than market risk VaR.

C : Both are calculated for one day.

D : Both are calculated for one year.

Answer: B

Question 4

Unconditional testing does not reflect the:

A : timing of the exceptions.

B : size of the portfolio.

C : number of exceptions.

D : confidence level chosen.

Answer: A

Question 5

In the context of arbitrage trades, if the CDS spread is significantly greater than the bond yield spread, what is the most appropriate action by the investor?

A : Buy the corporate bond and buy CDS protection.

B : Sell the corporate bond and sell CDS protection.

C : Buy the corporate bond and sell CDS protection.

D : Sell the corporate bond and buy CDS protection.

Answer: B

Page: 1 / 101

Total 503 Questions | Updated On: Mar 26, 2026

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