Free GARP FRM-Part-2 Exam Questions
Absolute Free FRM-Part-2 Exam Practice for Comprehensive Preparation
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GARP FRM-Part-2 Exam Questions
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Provided By: GARP
- Exam: FRM Exam Part II
- Certification: GARP Certification
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Total Questions: 503
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Updated On: Nov 24, 2025
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Rated: 4.9 |
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Online Users: 1006
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Question 1
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An option pricing analyst at an investment bank has been asked to write a reportexamining the relationship between option prices and implied volatility curves. Theanalyst notes that the implied volatility curves of different underlying assets oftenhave different shapes and explains the reasons why this occurs. Which of thefollowing statements can correctly be included in the report?
Answer: A
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An option pricing analyst at an investment bank has been asked to write a reportexamining the relationship between option prices and implied volatility curves. Theanalyst notes that the implied volatility curves of different underlying assets oftenhave different shapes and explains the reasons why this occurs. Which of thefollowing statements can correctly be included in the report?
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Question 2
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A senior risk analyst at VLT Bank (VLTB), a Singapore-based bank, is analyzing therisks arising from a significant appreciation of the SGD against all other major worldcurrencies. VLTB has the following balance sheet structure:▪ Assets:• Germany government bonds denominated in EUR• Singapore government bonds denominated in SGD• Corporate bonds denominated in EUR• Commercial loans denominated in SGD▪ Liabilities:• Long-term senior bonds denominated in EUR• Long-term senior bonds denominated in SGD• Retail deposits denominated in SGD• Corporate term deposits denominated in SGDThe analyst considers other recent market developments, including a decline inglobal equity prices, which resulted in many of VLTB’s larger retail depositorsexperiencing margin calls and drawing down deposits to meet them. The analystnotes that the bank took advantage of the demand for fixed-income securities andissued additional long-term senior SGD bonds and the proceed was used topurchase additional Germany government bonds. The overall impact of thesetransactions on VLTB is that the bank’s net cash outflows during the month, itsoverall net liabilities flow, and the required amount of stable funding, remainunchanged. The following additional information is provided:• The available stable funding (ASF) factor for retail deposits is 95%.• The ASF factor for long-term senior SGD bonds is 100%.The analyst also assesses the bank’s exposure to ConSol Corp, a publicly tradedSingapore manufacturer that is heavily dependent on locally produced raw materialsand generates its revenues primarily in EUR. VLTB is a major holder of ConSolCorp’s EUR-denominated bonds and has taken a long CDS position on the bonds.A German bank is the counterparty to that CDS contract.In analyzing the impact of the reported developments in the currency, equity, andbond markets on VLTB, which of the following is correct?
Answer: D
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A senior risk analyst at VLT Bank (VLTB), a Singapore-based bank, is analyzing therisks arising from a significant appreciation of the SGD against all other major worldcurrencies. VLTB has the following balance sheet structure:▪ Assets:• Germany government bonds denominated in EUR• Singapore government bonds denominated in SGD• Corporate bonds denominated in EUR• Commercial loans denominated in SGD▪ Liabilities:• Long-term senior bonds denominated in EUR• Long-term senior bonds denominated in SGD• Retail deposits denominated in SGD• Corporate term deposits denominated in SGDThe analyst considers other recent market developments, including a decline inglobal equity prices, which resulted in many of VLTB’s larger retail depositorsexperiencing margin calls and drawing down deposits to meet them. The analystnotes that the bank took advantage of the demand for fixed-income securities andissued additional long-term senior SGD bonds and the proceed was used topurchase additional Germany government bonds. The overall impact of thesetransactions on VLTB is that the bank’s net cash outflows during the month, itsoverall net liabilities flow, and the required amount of stable funding, remainunchanged. The following additional information is provided:• The available stable funding (ASF) factor for retail deposits is 95%.• The ASF factor for long-term senior SGD bonds is 100%.The analyst also assesses the bank’s exposure to ConSol Corp, a publicly tradedSingapore manufacturer that is heavily dependent on locally produced raw materialsand generates its revenues primarily in EUR. VLTB is a major holder of ConSolCorp’s EUR-denominated bonds and has taken a long CDS position on the bonds.A German bank is the counterparty to that CDS contract.In analyzing the impact of the reported developments in the currency, equity, andbond markets on VLTB, which of the following is correct?
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Question 3
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Three and a half months ago, XYZ Manufacturing lost their single largest customer, and the company stopped service of all debt payments to ABC Bank. The bank has seized some collateral, but they are working with XYZ as they form plans to find new customers and build a better future. For now, the loans to XYZ Manufacturing should most likely be classified as:
Answer: B
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Three and a half months ago, XYZ Manufacturing lost their single largest customer, and the company stopped service of all debt payments to ABC Bank. The bank has seized some collateral, but they are working with XYZ as they form plans to find new customers and build a better future. For now, the loans to XYZ Manufacturing should most likely be classified as:
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Question 4
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If the unconditional default probability of a Ba-rated bond during Year 3 is 1.914% and the probability of survival through Year 2 is 97.413%, the probability of a default during Year 3, conditional on no earlier default, is closest to:
Answer: D
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If the unconditional default probability of a Ba-rated bond during Year 3 is 1.914% and the probability of survival through Year 2 is 97.413%, the probability of a default during Year 3, conditional on no earlier default, is closest to:
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Question 5
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Which of the following statements regarding the differences between Basel I, Basel II.5, and the Fundamental Review of the Trading Book (FRTB) for market risk capital calculations is incorrect?
Answer: C
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Which of the following statements regarding the differences between Basel I, Basel II.5, and the Fundamental Review of the Trading Book (FRTB) for market risk capital calculations is incorrect?