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 presentation provided to executive leadership on the top 10 risks an entity is facing should include all of the following except:

A : descriptions of the risks.

B : inherent and residual elements of each risk.

C : timelines for risk eliminations.

D : a ranked order based on likelihood and severity.

Answer: C

Question 2

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

Question 3

Which of the following risks is specifically recognized by the incremental risk charge (IRC)?

A : Jump-to-default risk, as measured by 99% VaR, because a default could cause a significant loss for the bank.

B : Equity price risk, because a change in market prices could materially impact mark-to-market accounting for risk.

C : Expected shortfall risk, because it is important to understand the amount of loss potential in the tail.

D : Interest rate risk, as measured by 97.5% expected shortfall, because an increase in interest rates could cause a significant loss for the bank.

Answer: A

Question 4

Bank, Inc., (Bank) operates in the United States and has a service contract in place with Service Co. (Service), which operates in France. Service manages a significant amount of confidential customer data for Bank, and recently a computer glitch at Service resulted in the accidental public disclosure of confidential customer data. As a result of the data breach, which of the following risks is Bank least likely to face?

A : Country risk.

B : Compliance risk.

C : Operational risk.

D : Legal risk.

Answer: A

Question 5

The Black-Scholes-Merton option pricing model is not appropriate for valuing options on corporate bonds because corporate bonds:

A : have credit risk.

B : have an upper price bound.

C : are not priced by arbitrage.

D : have constant price volatility.

Answer: B

Page: 1 / 101

Total 503 Questions | Updated On: Apr 03, 2026

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