Exam Feedback May 2016 Part 1 Exam Feedback

[farahm]

i score 80% + on all garp practice exams and 70% + on BT. I feel like that didn't even matter.

 

[farahm]

@ashish_pandey exactly how I felt !! nothing was straight forward

 

[ashish_pandey]

i guess in real life into risk management we do get more than 2.5 mins to solve a situation but solving questions like this within 2 mins is like expecting too much..

 

[hpkhan010]

I found the exam tough. The level of difficulty was not even close to GARP 2016 practice exam. The real challenge for me was the qualitative questions. They were not straightforward and took more time to finish than expected. The quant problems were ok but very long and some very complicated too. Overall I felt the exam was long and intense. I don't think I am going to pass.

 

[yatod]

+1

 

[nissark]

The exam was a lot tougher than the GARP practice exam. Many questions were long worded and took significant time to read. So if you got an answer not aligning with the options after spending 2 min on it you have to choose if you want to invest another 2 min starting over. I did manage to reach the end of the paper with half hour to spare and re-look/attempt questions. But i am worried if I sped up a bit too much.

There were many type of questions I have never encountered in BT before.There were about 10 I had no idea how to solve, about 10 I could not match options with, and no idea how many wrong answers. There were many questions with long/short +/- of the same numbers, easy to go wrong when you are worried about time. Quite a few FX rate long worded questions which which could easily go wrong if you didn't read carefully. Also data quality had fair share of questions. (Just adding to previous posts, not repeating those already mentioned.)

I think the question difficulty was higher than BT on topics: FX rate, hedging, unexpected losses, CAPM related ratios. Lastly for theoretical questions, it was harder to narrow down the answers as almost no statement was directly picked up from the readings.

 

[Manjula]

There are some of the questions I can remember. I had finished very little of BT and did not rely even on the GARP books. I feel if I had finished all of BT materials surely would have passed with good marks. Better luck next time.

1. There was question which was exactly from GARP 2016 Practice Question-Calculate the value of put option using two step binomial model-same as in example i.e 20% increase and 80% downwards of stock price. Probability was given.
2. Then question on prepayment when beginning outstanding balance for the month, current month principal payment and prepayment given.
3. Interest rate parity question for Singapore Dollar/CNY...to calculate the 3 year forward rate when spot and interest rates given.
4. Max price a put option can take (cant remember whether European or American put)
5. 3 or 7 questions on the number of futures to either sell or buy when hedging.
6. GARCH and EMVA confusing 4 0r 5 theory questions.
7. A risk analyst has found out that there can be expected defaults in the oil and gas industry and published his findings; Later during a network event he conveyed to members about the oil and gas industry that it will default. So question was to pick the correct GARP violation.
8. 6 months back the exchange rate was so and also FX -Assets & Liabilities and FX (buy and sell) figures then were given. Currently, the bank realised -0.6% return and then current exchange rate was given. Find out the net gain or loss amount.
9. Accuracy principle was tested-pick out the correct one.
10. 3 0r 4 questions on the companies that had issues or disasters from risk management-Like lessons learned from them ..and rest don't remember exactly
11. Figures for standard deviation of market, beta, expected return of portfolio, expected return on market, beta and correlation given. An Analyst calculated with correlation of 0.6. But the second analyst found out the correlation was wrong and he found it to be 0.8. So to calculate the expected return of the portfolio when expected return of market, standard deviation of market, standard deviation of the portfolio, risk free rate remains the same.
12. A tough theory question on stack and roll and stripe hedge.
13. Calcuate the lease rate when risk free rate, store cost and convenience yield on a commodity given.
14. GARP 2016 Part 1 Practice question 99 -but with a slight variation-Excess Return was given. An analyst uses Information ratio and Sharpe Ratio (Sharpe Ratio more than 0.3) to identify the best Fund. Hence identify the fund.
15. Calculation on T-statistic-reject or accept the null hypothesis
16. 2 0r 3 questions from SWAP and FRA
17. Given Spot, Forward Rates and Discount Rates for 5 years. Calculate the Swap rate for fourth year or third year (can't remember that)
18. Calculate the dirty price of the bond- Clean price given, One year bond- The starting year is March 1, but has a leap year the next. How many days from Aug till Feb 29th next was given.
19. Theory Question on CCP
20. Algerian or some bank had exposure to Euro. The exchange rate was given. But the economists thinks a different exchange rate (it was also given).Calculate the loss or gain in Euros and whether the country had lower or higher inflation.
21. Calculate the futures price when spot price, amount of storage cost for a month and risk free rate given.
22. Tricky theory questions from Foundations of Risk Management like- on data values, aggregation, ERP, internal audit, Basel principle of Advanced measurement approach
23. One theory question on stress-testing ...kind of what is it.
24. One Theory Question on Monte-Carlo Simulation
25. 2 0r 3 questions on unexpected loss when related items were given.
26. 7 0r 8 More questions came from options.
27. Theory or Coupon Rate=YTM then market price = par value.Choose the correct one
28. Question on R^2....find out which is independent or something like that.
29. Theory question on R^2 - that is always positive and adjusted R^2 is also always positive
30. Callable and non callable bond-choose the correct ones- beneficial to the issues or the investor and price is higher or lower
31. One question on Conditional Probability- Stock price up, normal and down and economy good, normal and bad.
32. Calculate the probability of default when the distribution is Poisson
33. Calculate the Cumulative default probability for the second year when different credit ratings were given for the first year. (forgot the remaining)
34. Fund A amount was given. Then Risk Factor 1 and Risk Factor 2 for Fund A, B and C. How much of Risk Factor 1 can be hedged using Fund B and Fund C for Risk Factor 2.
35. Calculate thee 5-3-2 crack...oil into gasoline and another commodity. How much of the two components to buy or sell.

 

[Manjula]

For FRM, we need to have intensive understanding and that is what they are testing with just 20% of direct questions. Preparedness for real-life Risk Management starts before taking the FRM Exam!

 

[Manjula]

Professional Exams seems to be unfair but we are expected to have an indepth understanding with clarity. Practice makes perfect and do not get disheartened.

 

[SSK]

After reading through all these posts, let me say what I felt about the exam! It wasn't so hard in particular, however I must say there is a very very good chance of getting the qualitative questions wrong. It's because the choices were framed tricky. Questions 51-75 took me 1.5 hours to solve. This set was the toughest. Quantitative questions did take time to figure out the logic and calculate! Overall, I believe any score above 60 should definitely get you through the test.

Well, I'm confident that I'll pass the exam! Let's wait until June to officially hear about our results from GARP!

Hope the best guys! Take it easy Relax and enjoy your weekend..You deserve it

 

[Diep Anh Ngo]

I agree there was lots of qualitatives, that was unexpected for me. And Hard quant Qs (one of them was the probability of at least 2 exceedance for %80 VaR - by the way, really, what was that!!!)

I don't really believe that a risk professional need to solve these each questions in 2-3 minutes, questions that can not be solved manually, without a calculator.

Because of the time constraint, you don't have time to calculate again with calculator. For example, you need 7-8 calculatings sequentially. If your solution is not there, SURPRISE, most probably you skip to type a number. Skip the question or you'll lose 2-3 more minutes (remember binomial tree, american put question). That's ok, this is the way to solve question but when you evaluate the whole exam, you need time!, even you know the solution, you may need to pass to another question, time is passing by, unfortunately.

If GARP asks 80 Qs in 4 hours, suddenly will see that participants average score will increase, in fact most of these participants are able to solve them, but lack of time, participants are forced to lose their judgement... Moreover I think that concentrating 4 hours for an exam is not efficient, especially for FRM. As a participant, I lost my judgement after 2nd hour gradually.

You may think that 4-hour timing is the tradition for FRM. But the level of challange was also as usual?

Lots of people spent hundreds of dollars, hundreds of hours, sacrifice their social life, but I am afraid it is worthless today. Because GARP surprised us unfortunately.

I spent 500 hours for preparaton, solve each question that can be accessable, averaged 70 for GARP samples, 65 for Scheweser, 70 in BT, but expecting 55 in exam today.

This is something unfair

Totally agree with you, same feeling.

 

[akshay.chinchalkar]

It was a total shocker. As a first time test taker, I'd treat this exam as an "expect the unexpected". Also, I made the big mistake of relying on schweser - solely. That turned out to be my biggest undoing. I am assuming I will have to take the retest in November, but two things clearly stand out - one, do not try to cram everything in your head at the last moment; I did this, only to realize I didn't remember even the most basic stuff as the clock went off, and two, practise hard. I have already started preparing for the retest, and I will be signing up for the advanced course from BT, with the FRM handbook by PJ on my absolute must-do list. That book is a classic. People have talked about how difficult BT is in relation to the actual test - which am totally ok with given that I ended up looking like a dimwit thanks to Schweser - damn good for CFA prep but a total avoid for FRM. All the best everyone and work hard!

 

[CMalcolm]

@akshay.chinchalkar Fyi, I did the BT questions and review quizzes, but didn't find them at the level of the exam; most questions yesterday really required thinking outside the box. I suspect the only way to truly prepare for such an exam (given the FRM 2016 practice exam wasn't a useful guide either) is to purchase some of the text books and do all the exercises in those. Surely the advanced exercises would help prepare for FRM curve balls.
Will take a look at that FRM by PJ book, but it needs to have tons of tricky/difficult questions, because that is key to passing.

 

[Tril]

The exam was very tough. Theory question options were so close to each other, took time to figure out the correct answer. I scored well in BT mock and GARP mock, but that didn't help much.

 

[brian.field]

It was a total shocker. As a first time test taker, I'd treat this exam as an "expect the unexpected". Also, I made the big mistake of relying on schweser - solely. That turned out to be my biggest undoing. I am assuming I will have to take the retest in November, but two things clearly stand out - one, do not try to cram everything in your head at the last moment; I did this, only to realize I didn't remember even the most basic stuff as the clock went off, and two, practise hard. I have already started preparing for the retest, and I will be signing up for the advanced course from BT, with the FRM handbook by PJ on my absolute must-do list. That book is a classic. People have talked about how difficult BT is in relation to the actual test - which am totally ok with given that I ended up looking like a dimwit thanks to Schweser - damn good for CFA prep but a total avoid for FRM. All the best everyone and work hard!

Schweser is terrible for FRM!

 

[raya]

How did you guys solve the first ul question? I mean in schwser practice exam, exposure amount was outstanding +drawback(%)*credit line. But in the exam if I remember well drawback wasn't expressed as a percentage. I m not sure I remember well. Can someone tell me/

 

[akshay.chinchalkar]

Schweser is terrible for FRM!

Ask me mate!

 

[akshay.chinchalkar]

@akshay.chinchalkar Fyi, I did the BT questions and review quizzes, but didn't find them at the level of the exam; most questions yesterday really required thinking outside the box. I suspect the only way to truly prepare for such an exam (given the FRM 2016 practice exam wasn't a useful guide either) is to purchase some of the text books and do all the exercises in those. Surely the advanced exercises would help prepare for FRM curve balls.
Will take a look at that FRM by PJ book, but it needs to have tons of tricky/difficult questions, because that is key to passing.

I have already finished the first couple of chapters from the PJ FRM handbook and my personal opinion, I have encountered atleast a dozen trick questions already. For instance, a question that asks "for which of the following bonds is duration higher"? - high coupon, low yield, long maturity, a high frequency of coupon payments (this was the trick choice). I had to manually simulate the bond price to eliminate this choice and select the right answer. Its all about knowing the concepts, but I agree with some of the comments that you absolutely have to read the recommended textbooks. Since I am planning to take the retest in November, there is still plenty of time, and so an early start will help me go through the actual textbooks. Already, I can't tell you how good the handbook is!

 

[bpdulog]

Had the same feeling coming out of this as I had after the CFA exams, are they using the same question writers now??

Felt really good blazing through the first 5 questions, then got caught up in some ridiculous calculation questions. Unlike everyone else, I thought the quantitative part was harder and the qualitative stuff was more manageable. There was simply not enough time to do questions with 3 or 4 steps involved.

Despite all the practice exams (my results are posted on this forum for all to see), BT questions, entire QBank, numerous hours of reading and watching videos, I do not feel comfortable at all. All in all I put in at least 500 hours since December. Most questions had some element of a trick or trap involved. I also was not a fan of not having a watch to manage time.

The great part about this exam experience was the Javits Center was not packed to the gills, meaning no 20 minute waits for the bathroom.

 

[smstud]

What will be the expected cutoff for part 1?