Free GARP FRM-Part-2 Exam Questions

A group of newly hired investment analysts at a large wealth management firm isundergoing training on the company’s investment practices. Part of the trainingfocuses on hedge fund investments and addresses how the firm evaluates the riskmanagement processes and procedures of a hedge fund being considered forinvestment. The analysts learn that the firm performs comprehensive due diligenceon the hedge fund’s investment environment, as well as on its operationalenvironment and business practices. Which of the following is correct about a hedgefund investor’s due diligence on the operational environment of a hedge fund?

A portfolio manager at a US-based hedge fund has been searching for potentialreturn opportunities in the environment of declining global interest rates experiencedafter the global financial crisis (GFC) of 2007-2009. The manager identifies theexistence of a positive cross-currency basis between two currencies and notes thatthis positive basis has persisted since the GFC. What is the most appropriateexplanation for this persistence?

In the context of a potential nonmalicious data leakage incident by a bank employee, the following information is provided:There is a 99% chance that bank employees will receive a phishing email through their work email.There is a 95% chance that the bank’s firewalls will operate as intended.There is a 90% chance that the employee will know to immediately delete the phishing email.There is a 3% chance that the detective controls of suspicious network activity will fail.There is a 1% chance that there will be an exit of the leaked information.Using fault tree analysis (FTA) and assuming that the conditions just listed are fully independent, the likelihood of the risk of data leakage materializing for a given time period is closest to:

A risk analyst is implementing an enterprise risk management system at a bank. During the process, the analyst takes an inventory of risks faced by the bank and categorizes these risks as market, credit, or operational risks. Which of the following observations of the bank’s data should be considered unexpected if compared to similar industry data?

Which of the following statements best characterizes the differences between the Ho-Lee model with drift and the lognormal model with drift?