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 03, 2026

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Question 1

If portfolio assets are perfectly correlated, portfolio VaR will equal:

A : component VaR.

B : undiversified VaR.

C : marginal VaR.

D : diversified VaR.

Answer: B

Question 2

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 3

A credit analyst is evaluating the liquidity of a small regional bank while preparing a report for a credit committee meeting. With quarterly financial statements, the analyst calculates some relevant liquidity indicators over the past three years. Which of the following trends over this period should the analyst be most concerned about in the credit risk report?

A : The bank’s capacity ratio has been increasing.

B : The bank’s average net federal funds and repurchase agreements position has been increasing.

C : The bank’s loan commitments ratio has been decreasing.

D : The bank’s pledged securities ratio has been decreasing.

Answer: A

Question 4

The CRO at a bank wants to strengthen the bank’s capability to defend itself against emerging cyber-threats. To help achieve this goal, the CRO is assessing the current range of practices regarding the sharing of cybersecurity information between different types of institutions, as well as the potential benefits from sharing information. Which of the following statements would be most appropriate for the CRO to make?

A : Existing peer-sharing mechanisms among banks focus on the exchange of information related to cyber-security incidents, but such information is generally not shared from banks to regulators.

B : The scope and depth of information-sharing practices among banks may significantly vary between financial markets, depending on the level of trust among participating banks.

C : Information-sharing among different national regulators has evolved significantly over the past several years and is now a widespread practice at a large majority of jurisdictions.

D : The sharing of cybersecurity information among banks is less frequently observed and generally considered to be less effective than other cyber-security information-sharing practices.

Answer: B

Question 5

Which of the following features is least likely a benefit of collateralization?

A : Reduces capital requirements.

B : Reduces credit exposure.

C : Reduces market, operational, and liquidity risk.

D : Allows for more competitive pricing of counterparty risk.

Answer: C

Page: 1 / 101

Total 503 Questions | Updated On: Apr 03, 2026

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