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 05, 2026

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Question 1

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 2

Which of the following statements concerning the calculation of value at a node in a fixed-income binomial interest rate tree is most accurate? The value at each node is the:

A : average of the present values of the two possible values from the next period.

B : present value of the two possible values from the next period.

C : average of the future values of the two possible values from the next period.

D : sum of the present values of the two possible values from the next period.

Answer: A

Question 3

Sovereign Bank has an internal audit department, but the bank CEO hires an external auditor to review their financial statements and assess their internal control system. The audit firm is most likely considered to be which line of defense?

A : Third.

B : Second.

C : Fourth.

D : First.

Answer: C

Question 4

The Bureau of Labor Statistics has just reported an unexpected short-term increase in high-priced luxury automobiles. What is the most likely anticipated impact on a mean-reverting model of interest rates?

A : The economic information is long-lived with a low mean reversion parameter.

B : The economic information is long-lived with a high mean reversion parameter.

C : The economic information is short-lived with a high mean reversion parameter.

D : The economic information is short-lived with a low mean reversion parameter.

Answer: C

Question 5

Bank Macatawa has a $150 million exposure to Holland Metals Co. The exposure is secured by $125 million of collateral consisting of AA+-rated bonds. Holland Metals Co. is unrated. The collateral risk weight is 20%. Bank Macatawa assumes an adjustment to the exposure of +15% to allow for possible increases in the exposure and allows for a −25% change in the value of the collateral. Risk-weighted assets for the exposure are closest to:

A : $93.75 million.

B : $172.50 million.

C : $118.13 million.

D : $78.75 million.

Answer: D

Page: 1 / 101

Total 503 Questions | Updated On: Mar 05, 2026

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