FRM crash course advice

[mricho]

Hi David

I’m really keen on making an attempt at the FRM exams. I’ve only just received my Schweser reading material and ordered yours as well.
Is there enough time to read, assimilate and master both sets of material as well as the GARP readings (the unchanged readings from 2006)?

If I were to go with the GARP material and one other set from a service provider, should I go with Bionic or Schweser and why?

Can you suggest a strategic focus, i.e should I use the GARP section weighting as a guide. Also, should the focus be more on sharpening my knowledge (I’m a financial analyst and an accountant) or testing and exam practise? how close to the exam do you suggest a shift towards exam focus? (I’ve alloted 1-2 hours Mon to Friday and 4-6 hours on Sat and Sunday each, too little?).

Having just studied for the CFA level 2 exams, some material is relatively fresh, would that be sufficient groundwork in most areas. in your view how similar/dissimilar are the FRM and CFA level 2 exams. I did really well in the Fixed income sections and economics. Poorly in the quants and portfolio management.

Can I reach you by phone?

 

[David Harper CFA FRM]

Hi mricho,

It is tough to answer your strategic focus questions because (i) prior knowledge varies and (ii) the test is granular not conceptual. GARP posted 588 learning outcomes (many are compound questions!) for 140-150 test questions. By my estimate, a stunning 60-70+% of well-intentioned preparation will not lead to test questions (and we can't know which). I believe many who sit for the FRM must feel simultaneously under-prepared (inevitable due to granularity over wide content breadth) and over-prepared (you will study things that won't be tested).

In order:

* "Is there enough time to read...?" No, I do not think so. Regarding "unchanged 2006 readings," I suggest you update that pile by (1) eliminating the dropped readings [there is much material from last year that you don't need] and (2) get the free updates; e.g., the new Basel reading on credit concentration.

* "should I go with Bionic or Schweser and why?" I don't know how to answer, I don't study my competitors. My program is meant for busy people, to save them time. I don't copy source material wholesale like some do - I abstract it like cliffnotes. And I do lots of graphics to help people remember (our Turtle wanders the halls barking "give them more pictures, more pictures!"). My movies are carefully handcrafted.

* One aspect of my program, that I hope will help you, are the movie tutorial slides. Based on positive feedback last year, I devoted even more attention to these PPT slides. these PowerPoint slides are meant to double as flash cards. You will notice i color code keywords; some of the exam is frankly memorizing lists. Flipping through these 'flashcards,' it is my hope, is a quick way to transfer some of the content into your short term memory

* "Can you suggest a strategic focus..." etc

1. Strategic focus: Styles vary, but one thing is true: you must allocate time toward the exam date to taking practice questions; maybe at least one intense week or four less intense weeks.

2. Strategic focus: I would use the list of learning outcomes to help identify (i) where you will skim and (ii) where you will go deep in regard to the (study guide) assigned readings. At the end of the day, the LO document is your map.

2b. I will elaborate in my cram postings, but my list of *absolutely essential* topics/readings includes the following

* Volatility

* The probability cluster

* Hull in derivatives & Tuckman in Fixed income

* de Servigny, Meissner & Saunders in Credit

* Operational risk this year is frankly scattered and GARP could do better here. Tough to be strategic here because more than another other module, this module includes lots of LISTS. 1st reading L. Allen is dense (helpful), Chapter 10 de Servigny is dense summary of Basel, you need to look at Gallati's case studies (my next movie includes this).

* You need to access Basel II at a "principles level" - I counted 44 LOs related to Basel II - but you have the resources to *avoid* the long source document (the 1st Basel reading). It is my opinion a cram approach might avoid this source document in favor of the readings that summarize it (Davis, de Servigny, Kalyvas is very good too). Basel II can be a time trap if you let it - there is much detail you do not need to know, but you do need to have a principles level grasp

* The investment module is hard to strategize because, IMO, as weak as OpRisk is, Inv risk (sec V) is actually strong

* All of the assigned Jorion VaR 3rd Edition chapters. High calorie content, high testability.

* For sure read Stulz paper V.8. on "Hedge funds." It has the most LOs assigned to a single reading. But i would use provider material for the Stulz textbook chapters: the Stulz book is badly written and overly confusing

3. Yes, your CFA Level II prep puts you in a good position. Much overlap. I would tag the redundancies, but with one big caveat: go through the overlap with a keen RISK ORIENTATION. For example, your CFA Level II Fixed Income content (I am currently working with 2008) is a virtual superset of FRM. So you almost don't need the Tuckman readings. Except the CFA almost glosses over duration & convexity. But as sensitivities these are more relevant to risk and central in the FRM. So, just refresh/retool but keeping the focus on risk.

Same with credit derivatives: from CFA L II, you are already exposed to much of this EXCEPT you want to refresh here with an emphasis on credit derivatives as risk transfer vehicle (e.g., instead of "what is a CDO?" ask "how does a CDO transfer risk?" and "what are the risk motivations in a CDO?")

I would just line up the Study Guides (CFA to FRM) and you'll quickly see the commonalities (e.g., quant, fixed income, credit derivatives, corp finance) and where they do not overlap (e.g., economics, fin statements)

4. By phone, I am not resourced (or priced) to provide phone support. It would be unevenly distributed: i get this request heavily in the fall and not elsewhere. I added this forum to be more helpful in this regard