FAQ Exam Does Part 2 exam include material from Part 1?

[Cipher2014]

Hi,

I'm planning to take part 2 exam this coming May. But it's been 2 years since I passed the part 1 exam, and most of the material is a bit of a blur now.

Could someone shed some light on how much material from part 1 will be tested for part 2 (if at all)? Do I have to know details such as option trading strategies, valuation of forwards, FRA, swaps, hypothesis test, etc for level 2 exam?

Basically I want to know if I should go back to reviewing Part I material or just focus on studying for Part II using BT and Schweser?

Thanks!
Ying

 

[David Harper CFA FRM]

Hi Ying,

I am not aware of any formal guidance from GARP that speaks to your interesting question. Based on my years of working with the exams, here is my view: Part 2 depends on Part 1 implicitly but not explicitly. Here is what I mean: The Part 2 LO are already sufficient and specific guidance and, in general, GARP will test them conceptually (sidebar: many assume the AIMs are literal, rigorous guidance which is not necessarily true; it is better to think of them as a conceptual map to avoid the traps of memorization).

In this explicit sense, Part 2 FRM should not "go back" and test you against a Part 1 LO. But you can read many P2 LOs and see how they necessarily depend on (or repeat even) selected P1 LO concepts. In particular, this is true for quantitative P1.T2.

As such, there are large swaths of obvious and implicit dependence: Part 2 applications that depends on at least a reference to Part 1 concept/tool. Many of the details in Part 1 will simply not be tested in Part 2, of course. But there are numerous examples of an implicit dependence; e.g., VaR backtest (P2.T6) assuming knowledge of binomial and Type I/II errors (P1.T2). I hope that helps a little bit, good luck!

 

[Cipher2014]

That's good to know David! Thank you very much for taking the time to answer my questions!

 

[hikmaet]

I just passed L1 of FRM, now i am prepping for L2 in November. In my L1 prep, i did not manage to read certain parts of the book 4 ( anything after options ) and in book 3 I only read Hull chapters. I am now wondering should I finish reading those parts of L1 or should i just go to L2 readings straight up?

 

[ktrathen]

How much overlap is there between Level 1 and Level 2? If my exam gets postponed from November to January, I might start studying for Level 2. Are there any Level 2 topics that might help consolidate Level 1 material?

Many thanks.

 

[Nicole Seaman]

How much overlap is there between Level 1 and Level 2? If my exam gets postponed from November to January, I might start studying for Level 2. Are there any Level 2 topics that might help consolidate Level 1 material?

Many thanks.

@ktrathen

I moved your post to this thread, where this is already discussed. David provided an explanation above that may be helpful, but there may be other members who can comment further.