Free GARP FRM-Part-1 Exam Questions

Become GARP Certified with updated FRM-Part-1 exam questions and correct answers

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Total 533 Questions | Updated On: Jul 29, 2025

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Question 1

A risk manager at Firm SPC is testing a portfolio for heteroskedasticity using the White test. The portfolio is modeled as follows: The residuals are computed as follows: Which of the following correctly depicts the second step in the White test for the portfolio?

A :

B :

C :

D :

Answer: D

Question 2

Using the Black-Scholes model, compute the value of a European call option using the following imputs:Underlying stock price: $100Exercise price: $90Risk-free interest rate: 5%Volatility: 20%Dividend yield: 0%Time to expiration: one yearThe Black-Scholes call option price is closest to:

A : $15.33.

B : $13.65.

C : $16.71.

D : $17.99.

Answer: C

Question 3

Sue Johnson, FRM, has an elderly client with a very large asset base. The client intends to start divesting her fortune to various charities. Johnson is on the Board of a local charitable foundation. Johnson most appropriately:

A : should solicit the client herself, along with other Board members, to obtain a larger contribution.

B : can discuss her client's situation with the charitable foundation as long as she informs other local charities of her client's intentions.

C : must not discuss anything regarding her client and her client's intentions with the charitable foundation without permission.

D : can make this known to the charitable foundation so that they can solicit the client, since it is the client's wish to divest assets to charities in the future.

Answer: C

Question 4

Which of the following is not a reason to accumulate loss data?

A : Past losses are almost always repeated in the future.

B : It focuses management attention on the magnitude and e ect of risk.

C : It provides data necessary for empirical analysis.

D : It contributes to the understanding of future expected losses.

Answer: A

Question 5

Regarding a xed-rate, level payment, and fully amortized mortgage loan, which of the following statements is false?

A : Each payment consists of an interest component and a principal component.

B : Payments are equal over the life of the loan.

C : Principal repayment falls as interest payments rise over the life of the loan.

D : Interest payments fall as principal payments rise over the life of the loan.

Answer: C

Page: 1 / 107

Total 533 Questions | Updated On: Jul 29, 2025

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