Free GARP RAI Exam Questions

Become GARP Certified with updated RAI exam questions and correct answers

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Total 330 Questions | Updated On: Feb 18, 2026

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Question 1

A financial services firm is using a neural network with multiple hidden layers to predict the likelihood of loan default (binary classification). They find that the model isn’t learning well with the logistic activation function in the hidden layers. Which activation function should they consider switching to improve learning?

A : Softmax

B : ReLU

C : Hyperbolic tangent

D : Sigmoid

Answer: B

Question 2

A financial institution is creating a model inventory. Which of the following should be included to ensure comprehensive governance?

A : Only the model’s purpose and validation report.

B : Model owner, but not developer information, for clarity.

C : A description of model assumptions but not its risk classification.

D : Model owner, purpose, methodology, assumptions, limitations, and risk tier.

Answer: D

Question 3

Which of the following scenarios represents a binary classification problem?

A : Predicting the probability of different stock prices

B : Forecasting next month’s sales in dollars

C : Determining if a transaction is fraudulent or legitimate

D : Grouping customers into three income tiers

Answer: C

Question 4

During an NLS optimization, the analyst uses a gradient descent algorithm to update model parameters. If the improvement in the objective function falls below a certain threshold, the optimization process stops. What is the purpose of this threshold in NLS optimization?

A : To avoid overfitting by stopping after a set number of steps

B : To ensure convergence to the exact global minimum

C : To prevent unnecessary computations when further improvement is minimal

D : To improve model interpretability by limiting parameter updates

Answer: C

Question 5

A financial institution is implementing an AI model that uses proxies for loan approval decisions. Which of the following is a potential risk associated with using proxies?

A : Proxies might result in simplified metrics that don’t align with the actual objective.

B : Proxies require extensive computational resources.

C : Proxies ensure a direct alignment with the model’s intended objective.

D : Proxies make the model fully explainable to external auditors.

Answer: A

Page: 1 / 66

Total 330 Questions | Updated On: Feb 18, 2026

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