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: Apr 28, 2026

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Question 1

Which of the following statements best describe a difference between the standardized approach and older operational risk capital approaches?

A : The AMA was more flexible in its application than the standardized approach.

B : The advanced measurement approach (AMA) was introduced as part of the Basel III revisions.

C : The standardized approach uses a model-based methodology, while the AMA was more flexible and principle-based.

D : The standardized approach accounts for internal loss experiences that were not factored into the AMA.

Answer: A

Question 2

A junior risk analyst at a consulting firm is reviewing the operational arrangements of bilateral netting and central clearing of derivative trades. The analyst examines the following bilateral trades of three firms:• Firm 1’s exposure to Firm 2: AUD 90 million• Firm 2’s exposure to Firm 1: AUD 60 million• Firm 1’s exposure to Firm 3: AUD 12 million• Firm 3’s exposure to Firm 1: AUD 70 million• Firm 2’s exposure to Firm 3: AUD 57 million• Firm 3’s exposure to Firm 2: AUD 0 millionWhich of the following statements is correct?

A : Under bilateral netting, Firm 1’s net exposure is AUD 28 million.

B : Under bilateral netting, Firm 2’s net exposure is AUD 27 million.

C : Under central clearing, the CCP’s net exposure is AUD 28 million.

D : Under central clearing, Firm 3’s net exposure is AUD 0 million.

Answer: C

Question 3

Which of the following features is least likely a benefit of collateralization?

A : Reduces capital requirements.

B : Reduces credit exposure.

C : Reduces market, operational, and liquidity risk.

D : Allows for more competitive pricing of counterparty risk.

Answer: C

Question 4

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 5

Which of the following methods is not one of the three approaches for mapping a portfolio of fixed-income securities onto risk factors?

A : Cash flow mapping.

B : Present value mapping.

C : Duration mapping.

D : Principal mapping.

Answer: B

Page: 1 / 101

Total 503 Questions | Updated On: Apr 28, 2026

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