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 03, 2026

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Question 1

A credit analyst at an investment firm is estimating the 99% credit VaR of a 1-yearzero-coupon bond, the only debt issued by the firm. The analyst obtains relevantdata presented below:• Face value of the firm’s 1-year zero-coupon bond: CNY 630 million• The bond’s expected 1-year probability of default (PD): 6%• The bond’s 1-year recovery rate: 90%Assuming the variation of the future value of the bond is solely due to the possibilityof default, and the analyst’s estimate of the value of the bond in 1 year at the 99%confidence level is CNY 567 million, what is the bond’s implied 1-year 99% credit VaR?

A : C CNY 3.78 million

B : B CNY 3.40 million

C : A CNY 2.52 million

D : D CNY 6.30 million

Answer: C

Question 2

In which of the New Initiative Risk Assessment Process (NIRAP) business case topics would you most likely find an analysis of project costs and funding arrangements?

A : Commercial aspects.

B : Expected benefits.

C : Initial stage.

D : Alternatives.

Answer: A

Question 3

An option pricing analyst at an investment bank has been asked to write a reportexamining the relationship between option prices and implied volatility curves. Theanalyst notes that the implied volatility curves of different underlying assets oftenhave different shapes and explains the reasons why this occurs. Which of thefollowing statements can correctly be included in the report?

A : prices in out-of-the-money puts relative to out-of-the-money calls, which creates a

B : announcements on foreign exchange rates leads to higher prices, and higher

C : to the higher probability of a price change of between one and two standard

D : probability of a greater than three standard deviation price change than would be

Answer: A

Question 4

Which of the following statements regarding the differences between Basel I, Basel II.5, and the Fundamental Review of the Trading Book (FRTB) for market risk capital calculations is incorrect?

A : FRTB requires the calculation of expected shortfall with a 97.5% confidence level.

B : Both Basel I and Basel II.5 require calculation of VaR with a 99% confidence level.

C : FRTB requires adding a stressed VaR measure to complement the expected shortfall calculation.

D : The 10-day time horizon for market risk capital proposed under Basel I incorporates a recent period of time, which typically ranges from one to four years.

Answer: C

Question 5

Country X’s banking regulator established sector-specific cybersecurity requirements. This most likely indicates that Country X is a(n):

A : emerging economy with a homogenous banking system.

B : developed economy with a homogenous banking system.

C : emerging economy with a fragmented banking system.

D : developed economy with a fragmented banking system.

Answer: A

Page: 1 / 101

Total 503 Questions | Updated On: Apr 03, 2026

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