Free Practice GARP FRM-Part-2 Exam Questions 2025

Stay ahead with 100% Free FRM Exam Part II FRM-Part-2 Dumps Practice Questions

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Total 503 Questions | Updated On: Apr 09, 2025

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Question 1

The Bureau of Labor Statistics has just reported an unexpected short-term increase in high-priced luxury automobiles. What is the most likely anticipated impact on a mean-reverting model of interest rates?

A : The economic information is long-lived with a low mean reversion parameter.

B : The economic information is long-lived with a high mean reversion parameter.

C : The economic information is short-lived with a high mean reversion parameter.

D : The economic information is short-lived with a low mean reversion parameter.

Answer: C

Question 2

The market price deviations for puts and calls from Black-Scholes-Merton prices indicate:

A : unequal put and call implied volatility.

B : equivalent put and call moneyness.

C : unequal put and call moneyness.

D : equivalent put and call implied volatility.

Answer: D

Question 3

A risk analyst is reviewing his bank’s credit risk management policies. He notes that banks have limits on related-party financing decisions. His colleague agrees and correctly adds that:

A : the term single client only refers to a legal person.

B : acceptances and letters of credit should be factored into the risk exposure of a single client.

C : all banks have a limit of 10% of capital for a single client.

D : loan collateral should be included in exposure sizing using mark-to-market principles.

Answer: B

Question 4

Which of the following statements best describes the benefit of netting risk exposures?The benefits of netting are realized when:

A : marked-to-market (MtM) values have opposite signs for two trades.

B : expected exposure (EE) values are minimal.

C : marked-to-market (MtM) values have high structural correlations for two trades.

D : expected future exposure (EFE) values have zero correlation.

Answer: A

Question 5

Which of the following statements regarding risk assessment is most accurate?

A : Risk and control self-assessments (RCSAs) are a good mixture of qualitative and quantitative aspects.

B : The main purpose of risk assessment is to prioritize risk management and risk mitigation responses.

C : When backtesting the results of risk assessment against past incident experience, there is a tendency to underestimate the impact of an operational risk event.

D : When backtesting the results of risk assessment against past incident experience, there is a tendency to overestimate the likelihood of an operational risk event.

Answer: B

Page: 1 / 101

Total 503 Questions | Updated On: Apr 09, 2025

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