Exam Feedback May 2016 Part 1 Exam Feedback

[Anand Singh]

Got completely owned by GARP. I thought I was prepared after the Jorion Handbook. But then you never know.
Tried to crack the UL questions for about 10 - 12 mins, finally realizing that it is beyond me. All the theory questions were dicey.
After two hours I checked that I could only tick around 34 questions. Had to speed up after that. After that I was reading the first couple of lines of every questions and trying to find the answer. I marked the first answer that matched the paper. Still was not able to complete the paper. Drew random ovals for about 12-15 questions.
I could not concentrate the first hour in the exam with people streaming in even after 15 mins from the start and the invigilators had to convince them that they can't give the exam. And then they checked the ID and Calculator at least 4 times. Bad Bad experience.
I hope that I cleared the exam. It was a very grilling experience.

 

[alex_h]

i did decently well from questions 1 to 50 in 2 hrs..but screwed up from 51 to 75. last 25 questions went decent enough...theory was confusing while numericals were like never straight forward

totally agree

 

[EWebster]

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!

I made the mistake of relying completely on the GARP recommended books and didn't come across BT until a few months before the exam....BIG mistake. The GARP books were a complete waste of time and money. Thanks for recommendation of FRM handbook by PJ. Will look into it for November exam

 

[frmcandidate2016]

The exam was insane. It had nothing to do with the other exams, not only from Schweser or BT, but also from the official mock tests provided by GARP. It was biased towards non-quants candidates. Also, I made the mistake of relying on GARP material, and I for this exam it was useless.

For what I see in this forum there is going to be a great concentration of grades between 50 and 60 correct answers, with a great element of randomness. If they truly decide the passing grade using a curve it is going to be a huge difference in the passing rate by just one answer. Luck is going to be decisive, so good luck!

 

[y2alk]

I found the exam to be too long. Each quant problem needed lengthy calculations to derive the answer.

When I reached Qn 94, there was only 5 mins remaining.

 

[Johnkrause1]

I agree the exam was too long. There were a lot of lenghty calculations between 51-75. I skipped these first time round did the last 25 which I found to be ok.

On the second go I managed to answer another 8-10 which I found manageable but ended up guessing about 14 questions as I ran out of time.

 

[Safia Djemili]

I started out doing the questions that I knew I would solve and gained some confidence in the beginning. However I started to stumble on easy questions like calculating the put price using two step binomial tree and didn't get the right answer and then I was so stubborn to get the right answer that I probably spent 15 minutes on that questions. Also I hade problems with the commodity pricing questions. When they said that the storage costs was x % per annum and that the convience yield were y % per annum, I was'nt sure if they meant continuosly compounded or just take (1 + y%)*S0. I will definitely fail but it's a shame that you don't know how many questions were right on.

 

[Safia Djemili]

Was it the first time for you take the exam or not? For me it was the first time and I think next time I will do better, because now I know what will be expected from me. Also I am going to focus on to be more quicker to calculate the quant stuff. I need to be more friend with my calculator

 

[Johnkrause1]

Yes FRM are never too good at stating whether they are referring to continous compounding or periodic compounding. I usually go for the continuous compounding by default as the result should not be that different usually

 

[appu]

Hi,

I found the exam very tough, found myself completing 40 questions with 1.5 hours remaining. Had to do a lot of educated guesses since I was really running short of time. Is there a minimum cutoff for each of the 4 sections?

 

[bpdulog]

Hi,

I found the exam very tough, found myself completing 40 questions with 1.5 hours remaining. Had to do a lot of educated guesses since I was really running short of time. Is there a minimum cutoff for each of the 4 sections?

No it is based on overall score

 

[brian.field]

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.

@bpdulog - I remember being so discouraged that I sent David a private note asking for some advice. Then, when results were released, I passed with 2-1-1-2 (if I remember correctly.) I would also add that your practice exam scores were better than mine - so I feel very good about your chances. I would also like to express my appreciation for your willingness to share your practice exam scores. I am certain that people will benefit from that information in the future. I always intended on sharing mine, but I never get through as many as I'd like before the exam. I think I made it through 3-4 practice exams before my exam on Saturday and I will post those scores on the thread too.

Now on to the CFA (if I passed part 2!)

Best,

Brian

 

[y2alk]

I agree the exam was too long. There were a lot of lenghty calculations between 51-75. I skipped these first time round did the last 25 which I found to be ok.

On the second go I managed to answer another 8-10 which I found manageable but ended up guessing about 14 questions as I ran out of time.

Totally agree last 20 questions were quite straight forward and simple. I believe the 96th question was from GARP code of conduct and since i was too stressed out, couldn't get myself to understand the question. My mind was all over the place.

I guessed around 15 questions. Worst part is I left them blank to revisit but due to shortage of time had to guess without even reading the questions

 

[smstud]

Does anyone remember the answer for question in which default probability of C rated bond was to be calculated over 2 year time horizon?

 

[raya]

Does anyone remember the answer for question in which default probability of C rated bond was to be calculated over 2 year time horizon?

Hello! Yes. I remember this question. What do you want to know about it?

 

[Safia Djemili]

Does anybody remember the question of the probability of at least one overshooting for daily VaR with 80 days. I didn't answer the question, but I realise now that one should have used a binomial distribution (80 over k) and solve for P(X = 0) and P(X= 1). Do you agree that it is the way to solve the question?

 

[Siqueue]

Does anybody remember the question of the probability of at least one overshooting for daily VaR with 80 days. I didn't answer the question, but I realise now that one should have used a binomial distribution (80 over k) and solve for P(X = 0) and P(X= 1). Do you agree that it is the way to solve the question?

I remember the question and I recall that I used the binomial to get an answer and that the answer was one of the options (whatever good that does me) but can't remember the details beyond that.

 

[Siqueue]

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.

Wow that is impressive recall. You bring back some horrible memories.

In general I agree with the tone on the board here. This was a tough exam. In some ways the questions were easier (or at least shorter) than the practice questions that BT produce for each chapter - doing the BT chapter questions actually worried me as they were frequently long and involved. These questions weren't so long, but there were subtle variations on the concepts that made them challenging.

A good example of that is the question (I just replied to above) above how many times should you expect var to be exceeded, given that the var calculation is well specified.

Another, was on the UL related questions providing the exposure in terms of facility size and current utilization - I'm still not sure if using the EA as the current utilization is correct but I couldn't see how I could incorporate an assumption about further drawings.

I think there were only one or two questions that I was at a complete loss for (the 5 3 2 crack spread - I can't even recall seeing that before), but loads of other questions where I knew the theory fine but kept making a numerical error somewhere to get an incorrect answer.

 

[smstud]

Was the answer 28%

 

[hpkhan010]

There was a question about autocorrelation calculation with the displacement of 2 that I honestly wasn't prepared for. I must say I was able to tackle lot of quant problems only because I practiced BT. Schweser doesn't even come close in terms of difficulty level offered on the exam.

As the saying goes "Sometimes you win, sometimes you learn" I think I have learned a lot.