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: Jan 13, 2026

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Question 1

Due to lack of available investment opportunities in public markets, a pension fund decided to hire an investment consultant to assess the potential for investing in illiquid markets in the US. Which of the following characteristics of illiquid markets in the US should the consultant present to the pension managers?

A : During the 2008-2009 Financial Crisis, liquidity dried up in repo markets but not in commercial paper markets.

B : The traditional public, liquid markets of stocks and bonds are larger than the total wealth held in illiquid assets.

C : The share of illiquid assets in institutional portfolios has generally gone up in the past 2 decades.

D : Municipal bonds are usually more liquid than pinksheet over-the-counter equities.

Answer: C

Question 2

Assuming a loan portfolio of L, a recovery rate of RR, and the percentage of losses on a portfolio less than V(T, X), which of the following formulas is used to estimate credit VaR?

A : L × (1 − RR) × V(T, X).

B : L × (1 − RR) / V(T, X).

C : L × (RR) × V(T, X).

D : V(T, X) / [L × (1 − RR)].

Answer: A

Question 3

The four-quadrant approach categorizes information security risks as:

A : internal versus external and in house versus third party.

B : internal versus external and intentional versus unintentional.

C : intentional versus unintentional and digital versus physical.

D : intentional versus unintentional and theft versus corruption.

Answer: B

Question 4

Which of the following actions is not an advantage of the central counterparty (CCP) in the centralized clearing process?

A : Eliminate counterparty risk.

B : Risk reduction through multilateral netting.

C : Improve operational efficiency.

D : Loss mutualization.

Answer: A

Question 5

Which of the following statements regarding scenario analysis workshops and brainstorming sessions at a large bank is most accurate?

A : The most common procedure is to withhold a “preparation pack” of documents from participants and distribute them after the generation phase to minimize any bias introduced to the sessions.

B : The participants in the workshops and sessions should be taken from a full range of seniority levels within the different business units.

C : The facilitators of the workshops and sessions should be taken from the board of directors and senior management.

D : The assumptions used in scenario analysis can only be based on real-life data.

Answer: D

Page: 1 / 101

Total 503 Questions | Updated On: Jan 13, 2026

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