Exam Feedback FRM Part 1 (May 2014) Exam Feedback

[amresh]

The choices were given in term of range. I dont think I see any 2.7. I saw 1.75 to 2.5. that was closest I chose that...hm..[/quote

yes it was, and i selected some range... now am unsure of what i marked.

 

[Roshan Ramdas]

.....

I strongly felt that none of the options were correct, as the return on 40 M portfolio was 8 % and the same on 60 M portfolio was 9 % . Which gives average return of 8.6. Hence at-least one of the options had to have mean return off 100*8.6. i.e. the mid point of the +/- Sigma range. I checked for it but did not get it. And then decided to guess "A" and move ahead.

I could be wrong here but I think I saw 2 options
1 with a mean of 100 +/- (2 * Sigma)
and the second with a mean of 100*1.086 +/- (2* Sigma)
Gosh,....I am now getting a feeling that my memory may no longer be reliable

 

[Wolf]

Plulutes, Babak083,
I too took Nov 13 Part I and although I found it tricky, I nevertheless found May 14 trickier especially in the Quants area.
Regarding your comments I couldn’t agree more. i.) no shame in re-sitting ii.) I have benefited more studying 2nd time round, especially with BT material (compared to Schweser first time round).

I too skipped a number of questions (10-12) hoping to have time to review them at the end, which I didn’t. I too wish I had more time to review in greater detail. What I found most frustrating, on personal level, was that I skipped questions which was bread and butter to me during the mocks but I just couldn't answer on the day i.e. my calculations were incorrect. Referring to percentages, I think I answered 50% solidly (let's say I got 40 correct), yet 30% reasonably guessed (let's say i got 15 of these correct) with 20% as a flat out guesses (let's say i got 5 of these correct).
In terms of knowledge and answering questions, I did do better than in Nov 13 but as mentioned I just didn't have time to review the skipped questions which I think will cost me.
I have benefitted immensely from the BT material, but feel that based on the outcome of Nov 13, I still haven’t done enough.
Regards
Wolf

 

[plulutes]

Plulutes, Babak083,
I too took Nov 13 Part I and although I found it tricky, I nevertheless found May 14 trickier especially in the Quants area.
Regarding your comments I couldn’t agree more. i.) no shame in re-sitting ii.) I have benefited more studying 2nd time round, especially with BT material (compared to Schweser first time round).

I too skipped a number of questions (10-12) hoping to have time to review them at the end, which I didn’t. I too wish I had more time to review in greater detail. What I found most frustrating, on personal level, was that I skipped questions which was bread and butter to me during the mocks but I just couldn't answer on the day i.e. my calculations were incorrect. Referring to percentages, I think I answered 50% solidly (let's say I got 40 correct), yet 30% reasonably guessed (let's say i got 15 of these correct) with 20% as a flat out guesses (let's say i got 5 of these correct).
In terms of knowledge and answering questions, I did do better than in Nov 13 but as mentioned I just didn't have time to review the skipped questions which I think will cost me.
I have benefitted immensely from the BT material, but feel that based on the outcome of Nov 13, I still haven’t done enough.
Regards
Wolf

I had a few that I skipped that I thought I could do but passed on them at the time in order to make more time for easier questions, but I never got back to them. The probability questions I thought were messing with my head a bit. Don't know why, but they weren't clicking in my noggin that day. Usually, I am pretty fair with them, especially Bayes, but oh well. Based upon your estimation of the exam (i.e. 50% answered correctly so you're figuring 40--safe! I like it!, etc.) which I think is a good proxy, then I think you're on the right side of a squeeker. Our practice scores were very close to each other too. I used 40%(80% of those correct) with 30% 50-50, and 30% outright guess for the first exam and it got me 3,3,2,2 and this time I'm guessing I correctly answered 50 (80% of those correct), and 35 were 50-50, and about 15 were flat out guesses (and a couple of those were in areas that I knew, but could wrap my head around how to do it with the way they asked it). So, Im thinking I improved about 8%, approx. But the thing is is that this was a brand new test and was nothing like the first one, SO WHO KNOWS! All I can say for sure is that I felt a little better than the first test, and I can't see scoring worse than previously; and I'm sure you didn't either. Anyway, keep your chin up. If the test from Nov. is any indicator, you did better than you think.

 

[Filip Nikoloski]

800.
That's tough one as time has to be minimum and takes minimum number of scenarios.. I too I was confused.

I think the correct answer was 1.600. First time I saw question like this. I did it in some logic.

 

[Filip Nikoloski]

Hi, candidates who seat also for PART I 2013 Nov. exam, how do you think the difference between Nov 2013 and May 2014. I think this exam was more difficult than November exam.

Hi, It was at least 30% harder than in Nov 2013

 

[Adelaide]

I think the correct answer was 1.600. First time I saw question like this. I did it in some logic.

The difference to the mean in the new confidence interval was 4 times less than the previous one. That's why I think also that no. of scenarios should be 200 * 8 = 1600 to reduce 4x. But I picked up 800.....

 

[Jo_]

The difference to the mean in the new confidence interval was 4 times less than the previous one. That's why I think also that no. of scenarios should be 200 * 8 = 1600 to reduce 4x. But I picked up 800.....

I don't remember the exact question, but indeed the difference was 4x, so if i'm remembering correctly, you need 4² = 16 times more scenarios then in the original case (don't remember how many there were in the first place, 200?). I believe it was the highest number from the possible answers.

 

[amresh]

I could be wrong here but I think I saw 2 options
1 with a mean of 100 +/- (2 * Sigma)
and the second with a mean of 100*1.086 +/- (2* Sigma)
Gosh,....I am now getting a feeling that my memory may no longer be reliable

I might have not checked well..

 

[an12]

for the number of scenarios the correct answer as per me should be 3200 as quadrupling scenarios will give half CI.. in question CI was 1/4 times the original.. therefore 800 will give 1/2 CI. to reduce it further one should further mutlipy it 4 times. again sqaure root of 3200 is 4 times square root of 200

 

[an12]

i too got 2.7

evn mine was 2.7.

 

[an12]

on the dollar duration question my piece is.. i considered it aas DV01 and got the answer it was thr in the answers .. so i guess it shld b correct.. the formula was (Delta BV/ delta Y) * (1/10000)

 

[an12]

There is one question when they gave the computed B1 and B2 t-stats value (1.64 and 2.33) and asks to compute F stats and determine if it is significant at 95% (reject and accept the Null Hypothesis that B1=0 and B2=0)..I dont know how to compute F stats from B1 and B2 so I make a guess that if B1 and B2 are both significant at 95% then F stats is also significant at 95%...Is that correct ?

for this question i took correlation as litmus test. as sqr of correlation = R sqr. therefore the R sqr came to .09.. which means the statistical significance of independent variables is too low. accordingly the f test is not statistically significant

 

[an12]

on the std

If i am correct, there actually was an exercise on this in David's set, which is were i based myself on. Basically, if i remember correctly, you need to chose the one for which SE times sqrt(t) is lowest. Stdev, number of scenarios and total time to run scenarios was given. So i calculated SE for each based on Stdev/sqrt(#scenarios run), then multiplies with sqrt(#time needed to run all scenarios) and took the minimum of that. However, i'm not 100% sure if i needed to use sqr(#time all scenarios) or sqrt(#time one scenario).

And I thought of you for the crack spread question indeed However, the one you explained was 1 output from 2 inputs, here it was 1 input for 2 outputs. Despite spotting that difference, i didn't find the correct answer either. I came up with 5, whereas the options were -10 and 10.

On the barbell one, i didn't get that one either. I'm getting the feeling there were some questons which many many candidates won't get



Never really thought of it that way, but that's absolutely correct! Scares me a little bit, but i remain hopeful

on the efficient estimator the formula as per book is one with lowest std/sqr root of time.. i m confused whtr it shld b total time or time for 1 scenario.. i finally selected option c that was one with lowest std dev per scenario

 

[an12]

i also opted for 12th and not 13th lets

May be,....didn't read it that way though.....if it were today, then the text should have simply read by the end of the day.[/q
c..

 

[Adelaide]

on the std

on the efficient estimator the formula as per book is one with lowest std/sqr root of time.. i m confused whtr it shld b total time or time for 1 scenario.. i finally selected option c that was one with lowest std dev per scenario

was that the the on with 25% standard deviation or with 30%...? if you remember...

 

[an12]

wat a blunder i did i completely ignored its lambda ^T= 1/2 .. i took lamda as 0.5.. such a shame.. 4 hours r really too long to concentrate

Had to skip 7/8 questions while doing the exam because i had no idea how to begin with them. Got 40 minutes left in the end of the exam to have a second look, so time mangement wise, i'm happy i could finish the entire exam without having to skip questions. Wonder how other candidates did time-wise? I felt most people in my testing site were able to complete the exam, contrary to expectation.

Content-wise, i guess many of the questions were to be expected. Maybe somewhat more qualitative questions then expected (there were 2 on the new country risk chapter, btw). For future candidates, i do think it's important to stress the GARP practice exams. There were at least 3 questions which were literally copy/paste. I do think that's a nice gesture of GARP, to "reward" candidates with thorough prepration.



There is a formula to calculate F-stat from the individual t-stats and correlation. I knew it exists but I personally skipped it when i was studying because i thought it was an overexagerated formula to expect candidates to know. If GARP truely wants to be "practice-oriented", i really think these kind of questions are ridiculous. In practice, you'll get the p-value. In that sense, i liked the more qualitative questions from QA more (like the interpretation of the scatterplot and R² implications). Anyway, applying the formula on 1.64, 2.33 and 0.3 correlation gives an F-stat of 7-something, so the answer should be significant if i'm correct.



I found that a bit strange too indeed. I did: lamda^23 = 1/2 --> lamda = 0.97.. Then 0.03 times 0.97^4 was one of the given answers.

On the forward rates: i believe the currency was quoted in reverse (in David's exercises the EUR/USD was always given as e.g. 1.2. Garp now gave it as 1/1.2. That's probably why the order of the rates was inverse too. I converted the rate to the "norrmal" notation, did the "normal" calculation and then converted back. Maybe a bit of a detour, but i felt most safe like that and the answer was in the list.

 

[an12]

sry but i srsly dont remember tht.. i just remember its option c

was that the the on with 25% standard deviation or with 30%...? if you remember...

 

[an12]

can anyone confirm the answer for following 2 ques
1. prob ques.. the one at beg.. saying joint prob of a and b is 5 percent.. and conditional prob of b on A being 0.5. prob of neither happening ..
i selected 85 % .. as A independent prob wld be 10% i.e. 0.5/ 0.05 and neither a and b= 1- 0.05-.10 = .85 ..
2. the total number of payments on tht ISDA confirmation stuff.. with qrtly floating payment and fixed payment.. options were 5, 14, 21 .. i selected 14 .. dunno if its right or wrng
can anyone pls confirm

 

[hoang.vu90]

can anyone confirm the answer for following 2 ques
1. prob ques.. the one at beg.. saying joint prob of a and b is 5 percent.. and conditional prob of b on A being 0.5. prob of neither happening ..
i selected 85 % .. as A independent prob wld be 10% i.e. 0.5/ 0.05 and neither a and b= 1- 0.05-.10 = .85 ..
2. the total number of payments on tht ISDA confirmation stuff.. with qrtly floating payment and fixed payment.. options were 5, 14, 21 .. i selected 14 .. dunno if its right or wrng
can anyone pls confirm

1. Yes I got 0.85% for that one as well. I used different method to derive it..tree method as I learn it in my uni.
2. I am not sure about this question as well. neva seen it in the reading..the length of the swap is 2 years with quarterly payment. so I choose 7 since the start date of the fixed leg payment seems to be off a little bit from the floating leg payment but its just a guess...