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 15, 2026

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Question 1

A bank employee has been manipulating suspense (transitory) accounts for a prolonged time, and this event was determined to be a significant operational incident. Which of the following time intervals in terms of the operational incident date is most likely to be the longest?

A : Date of reporting to date of accounting.

B : Date of occurrence to date of discovery.

C : Date of discovery to date of reporting.

D : Date of occurrence to date of reporting.

Answer: D

Question 2

In the context of arbitrage trades, if the CDS spread is significantly greater than the bond yield spread, what is the most appropriate action by the investor?

A : Buy the corporate bond and buy CDS protection.

B : Sell the corporate bond and sell CDS protection.

C : Buy the corporate bond and sell CDS protection.

D : Sell the corporate bond and buy CDS protection.

Answer: B

Question 3

The structural model of credit risk is most likely a(n):

A : heterogenous model.

B : dynamic model.

C : random recovery rate model.

D : implied copula model.

Answer: B

Question 4

Unconditional testing does not reflect the:

A : timing of the exceptions.

B : size of the portfolio.

C : number of exceptions.

D : confidence level chosen.

Answer: A

Question 5

Which of the following statements regarding risk management programs with service providers to manage outsourcing risk is correct?

A : The program should contain more detail if there are only a few outsourced activities to established service providers.

B : The program should focus on business continuity and contingency plans.

C : The program should contain adequate oversight and controls over all activities that impact the financial institution.

D : The program should require risk assessments to be updated as a result of updated risk mitigation techniques on a sufficiently regular basis.

Answer: B

Page: 1 / 101

Total 503 Questions | Updated On: Apr 15, 2026

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