FRM Handbook

[wrongsaidfred]

Hi David,

I have read quite a few posts that mentioned the FRM Handbook. I have read all of the suggested reading material mentioned on the study planner but have not touched the FRM handbook. Is this something I should plan on doing before I take the level 1 test in November?

Thanks,
Mike

 

[David Harper CFA FRM]

Hi Mike,

Right, it's a common question. Many who asked in this upper, public forum have not purchased our material or necessarily other material. To them, I say (and I do mean) that the Handbook is great introduction to most of the FRM Level 1 (Level 2: less true as time passes between publish year and exam year). As you know, it does not have a 1:1 correspondence to current (or any) year AIMs. So, for candidates unwilling to spend any additional money but only on the handbook, I've not argued against that strategy (although, in those shoes, frankly, I have also just recommended Schweser's notes).

But in your case (i.e., somebody who either is reading the source or reading other core material like our slides or notes), the FRM handbook, in my opinion, is not necessary. Sure, with unlimited time and budget, more is better, etc. But it's only advantage, at that point, is to get a second/third interpretation (eg., seeing counterparty exposure from another angle). This is a luxury not a need. Another point: Jorion authored the text but he did not author the questions (why does this matter? His text is precise and high-quality, but the questions have a meaningful error rate which is not his signature). For this reason, for someone like you, if you want to add another book, you would do just as well to consume his VaR 3rd edition book (yes, the 3rd edition is dated, but really so is the handbook as the 6th edition is unforgivably not different from its 5th edition. Not deadly, as FRM L1/P1 is more foundational than topical).

Now the handbook has two components: material + actual, past questions. With regard to the handbook's questions, I have never been an advocate. Especially if you have a BT subscription, to be immodest, our questions will help you better prepare. The handbook keeps some degree of old questions; the further back they go, the less relevant and even counter-productive they (old questions) can be. For example, not too many years ago, GARP's question would assume you would use a duration of 7.0 (without giving that number!) for a 10-year coupon-bearing bond. But today's well-prepared candidate will not make such an assumption, knowing duration varies with coupon ... So our customers (IMO) definitely don't need the handbook for the questions. More of our questions are "leaning into" the next exam, based on current assignments.

I hope that is helpful, David