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 19, 2026

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Question 1

A derivative trading firm sells a European-style call option on stock JKJ with a time to expiration of 9 months, a strike price of EUR 45, an underlying asset price of EUR 67, and implied annual volatility of 27%. The annual risk-free interest rate is 2.5%. What is the trading firm’s counterparty credit exposure from this transaction?

A : EUR 0

B : EUR 9.45

C : EUR 22.00

D : EUR 19.63

Answer: A

Question 2

Which of the following statements best describes a Gaussian copula?

A : A major disadvantage of a Gaussian copula model is the transformation of the original marginal distributions in order to define the correlation matrix.

B : The mapping of each variable to the new distribution is done by defining a mathematical relationship between marginal and unknown distributions.

C : A Gaussian copula maps the marginal distribution of each variable to the standard normal distribution.

D : A Gaussian copula is seldom used in financial models because ordinal numbers are required.

Answer: C

Question 3

Which of the following statements best describes a Gaussian copula?

A : A major disadvantage of a Gaussian copula model is the transformation of the original marginal distributions in order to define the correlation matrix.

B : The mapping of each variable to the new distribution is done by defining a mathematical relationship between marginal and unknown distributions.

C : A Gaussian copula maps the marginal distribution of each variable to the standard normal distribution.

D : A Gaussian copula is seldom used in financial models because ordinal numbers are required.

Answer: C

Question 4

An analyst at a fixed-income investment company is evaluating different ways thecompany uses to estimate the VaR of its corporate bond portfolios. The portfoliosconsist of a large number of bonds with a wide range of maturities. The analystexamines the possibility of using a mapping approach to simplify the estimationprocess. Which of the following statements would the analyst be correct to makeregarding the approaches to mapping fixed-income portfolios?

A : undiversified VaR estimated using the duration mapping approach due to an adjustment made for correlations.

B : a zero-coupon bond whose maturity equals the duration of the portfolio.

C : VaR estimated using the duration mapping approach since it does not account for

D : of a portfolio since it ignores coupon payments and any risk associated with them.

Answer: B

Question 5

An investor records its investments on its internal systems and reconciles them with the investment listing on the brokerage statement each month. This reconciliation is best described as a:

A : directive control.

B : corrective control.

C : preventative control.

D : detective control.

Answer: D

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Total 503 Questions | Updated On: Mar 19, 2026

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