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: Jul 08, 2024

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Question 1

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 2

A risk analyst is evaluating an investment portfolio using the Fama-French threefactormodel. The analyst regresses thirty years of weekly portfolio returns againstthe three factors of the model. The analyst obtains the following regression results:Alpha 0.10Market coefficient 0.52SMB coefficient 0.18HML coefficient -0.70Assuming all estimated coefficients are statistically significant, which of the following is correct?

A : indicates that the portfolio moves together with large-cap stocks.

B : indicates that the portfolio moves together with growth stocks.

C : indicates that the portfolio moves together with growth stocks.

Answer: C

Question 3

A portfolio consists of two positions. The VaR of the two positions are $10 million and $20 million. If the returns of the two positions are not correlated, the VaR of the portfolio would be closest to:

A : $15.00 million

B : $22.36 million.

C : $25.00 million.

D : $5.48 million.

Answer: B

Question 4

A regional bank wants to improve its operational resilience to help keep pace with emerging best practices in this area. A consultant hired by the bank recommends that it establish a set of impact tolerances to improve its resilience. Which of the following correctly describes a potential benefit to the bank of establishing an impact tolerance?

A : It will help the bank optimize its allocation of resources to its most important business services.

B : It will enhance the bank’s ability to identify and limit concentration risk.

C : It will accurately estimate the severity of a potential disruption to an operational process and the amount of downtime that would result.

D : It will prevent failures of critical operational processes and the systems that support these processes.

Answer: A

Question 5

Which of the following statements most accurately reflects the time horizons typically used for market VaR and credit VaR calculations?

A : Market risk VaR is calculated over a longer time period than credit risk VaR.

B : Credit risk VaR is calculated over a longer time period than market risk VaR.

C : Both are calculated for one day.

D : Both are calculated for one year.

Answer: B

Page: 1 / 101

Total 503 Questions | Updated On: Jul 08, 2024

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