Free GARP FRM-Part-2 Exam Questions

A credit risk analyst is trying to determine the percentage of a loan that is expected to be lost if a specific borrower were to default. Which of the following metrics should he apply?

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

As part of a broader assessment of migration risk, a risk analyst at a rating agency examines the observed defaults of a given rating class of corporate issuers. The rating class contained 348 names (number of issuers) at the end of 2016, which was the time of origination. The number of issuers that have not defaulted over the past 3 years is shown in the table below:Year AND Number of non-defaulted names at end of year2016: 3482017: 3392018: 3332019: 329Assuming no new issuers were added to the rating class throughout the holding period, what is the estimate of the 1-year marginal probability of default in the year 2019?

Which of the following statements about a stressed value at risk (VaR), required under Basel 2.5, is correct?

A group of newly hired investment analysts at a large wealth management firm isundergoing training on the company’s investment practices. Part of the trainingfocuses on hedge fund investments and addresses how the firm evaluates the riskmanagement processes and procedures of a hedge fund being considered forinvestment. The analysts learn that the firm performs comprehensive due diligenceon the hedge fund’s investment environment, as well as on its operationalenvironment and business practices. Which of the following is correct about a hedgefund investor’s due diligence on the operational environment of a hedge fund?