FRM-Exam-Questions-Formula-Based
As we have seen that quite a lot of portion of FRM Exam is based on numerical calculations and some of those questions are tough as well. We thought that it is best to find a mix of questions, that are purely formula based (And if you know the formula, you can easily do them) and how many require deeper understanding of material and require atleast a few combinations of formulas and concepts (maybe interpreting the data, and finding the relevant values to be used and then combining 2-3 formulas to get to the result).
If we look at the FRM Exam Practice Paper 2009, we find that 50% of the questions are purely formula based questions. This is good news!
If you are able to understand the question, remember few formulae, use the calculator properly and make no silly mistakes, you can crack a majority of the numerical questions as well!
Within the formula based questions for Value at Risk, the most common question (usually multiple number of questions are based on this concept) is related to finding the portfolio VaR. Calculating the portfolio VaR requires the calculation of portfolio volatility, for which we have the simple formula:
VaR(Portfolio)= wa^2*σa^2 + wb^2*σb^2 + 2*wa*wb*σa*σb*Corelation(a,b)
Similarly another common formula is calculating the annual VaR from daily VaR (or changing the time duration of VaR) or calculating the significance intervals. These again use simple formulas:
VaR (for time period T) = VaR(Daily) * Sqrt(T)
VaR (Significance Level alpha) = Z (Alpha) * Sigma
Similarly Questions on Quantitative Analysis, which are formula based, are based on EWMA, GARCH formulas, which are quite simple to calculate, if you know the formula and can apply it in the question.
Typical formulas would be:
Return = ln(P(t)/P(t-1))
(Sigma(n))^2 = lambda * (Sigma(n-1))^2 + (1 – lambda) * U(n-1)^2
Similarly the formula based questions from the rest of the parts are not very difficult. If you are able to remember them and apply them in the FRM Exam, rest assured, your chances of success would be very high.
Pristine realized this long ago, that covering full Risk Management Syllabus on the last day and remembering a whole lot of formulas can be a daunting task. Pristine summarizes a whole lot of important concepts, formulas and questions based on those formulas in VisualizeFRM®.
Visualize FRM - Simple way to Crack FRM
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Pristine Careers is starting sessions on discussing the FRM Exam Pattern. This would give more clarity to the students appearing for the exam, and they would be able to formulate a strategy for preparation for FRM Exam. The analysis is based on Sample Exams that GARP has sent to its course providers over a period of time. The analysis from Pristine would be led by Atul Kumar.
Pristine would also be uploading sample questions based on this analysis, so that students can use them to see their preparation levels. Pristine would also be conducting specific sessions to discuss questions that are of the level of FRM Examination. To register for the sessions, please contact Pawan Prabhat by calling on +91 98676 25422.
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- FRM-Questions-Numerical-vs-Theoretical FRM-Questions-Numerical-vs-theoretical There has been debate about the kind of questions asked in FRM Exam. If you meet 100 people who have appeared in the examination,...
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 | Pristine is India’s largest training provider for international certifications like CFA®, FRM®, PRM®. It has been found by industry professionals who have worked in the area of investment banking and private equity in organizations such as Goldman Sachs, Crisil - A Standard & Poors Company, Standard Chartered and Accenture. Pristine has conducted more than 500,000 man-hours of quality training in finance. It has conducted trainings for J. P. Morgan, Bank of America, E&Y, ING Vysysa, IIM Calcutta, NUS Singapore, ISB and others. |