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 21, 2026

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Question 1

Assume a sovereign bond has a haircut of 5% and is used for a collateral call of $100,000. What amount is credited if a $100,000 bond is submitted, and what amount of bond is needed for $100,000 to be credited, respectively?

A : $100,000; $106,263.

B : $95,000; $105,263.

C : $95,000; $100,000.

D : $105,263; $95,000.

Answer: B

Question 2

At inception, the tranches in a synthetic CDO are priced to earn a spread that is:

A : higher for senior tranches, as they represent a larger notional principal.

B : aggregate in amount to the premium paid to binary CDSs.

C : consistent with their seniority.

D : equal for each tranche.

Answer: C

Question 3

Which of the following statements regarding scenario analysis workshops and brainstorming sessions at a large bank is most accurate?

A : The most common procedure is to withhold a “preparation pack” of documents from participants and distribute them after the generation phase to minimize any bias introduced to the sessions.

B : The participants in the workshops and sessions should be taken from a full range of seniority levels within the different business units.

C : The facilitators of the workshops and sessions should be taken from the board of directors and senior management.

D : The assumptions used in scenario analysis can only be based on real-life data.

Answer: D

Question 4

Brett Doninger recently placed an order to sell a stock when the market price was $42.12. The market was volatile and, by the time Doninger’s broker sold the stock, the price had fallen to $41.88. In the market, this phenomenon is known as:

A : the spread risk factor.

B : transactional imbalance.

C : adverse selection.

D : slippage.

Answer: D

Question 5

A bank is located near a college campus and would like to attract students to the bank. Which of the following conditional pricing demand deposit accounts would most likely appeal to a college student?

A : A low or zero minimum balance account with low- to moderate-item charge/activity fees account.

B : A low or zero minimum balance account with high item charge/activity fees account.

C : A high minimum balance, no item charge/activity fees account.

D : A high minimum balance, high item charge/activity fees account.

Answer: A

Page: 1 / 101

Total 503 Questions | Updated On: Mar 21, 2026

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