Memorizing more complex formulas for Part 2

[marketmaker]

Hi,

Could anyone whose already sat for Part 2 confirm whether or not we're supposed to memorize more complex formulas like the Merton model's PD, etc for the exam?

Some are ridiculously long (especially the one's in Credit Risk section) and I am seriously doubting whether GARP expects us to have memorized them.

 

[ShaktiRathore]

Yes u need to memorise formulas lile merton models. U need to memorise 100% for sure the formulas associated tightly with the topics explicitely mentioned in the AIMs ,please read carefully the AIMs because its from there the frm exam is set. If some formulas are associated with a topic mentioned in AIMs i would understand and memorise all of them because that would make me better understand the topic. There are some formulas like in EVT or credit risk which are too complex but if they are mentioned in Aims i would atleast understand them that is what are all parameters and how they go in the formula.
Thanks

 

[marketmaker]

Thanks for your reply.
Merton PD/LGD formulas are written under the following LOS:

LOS21.2: Explain the diff between valuing senior and subordinated debt using contingent claim approach
LOS21.3: Explain, from a contingent claim perspective, the impact of stochastic IR on the valuation of risky bonds, equity and risk of default

I'm not entirely sure whether to read this as "memorise the formula" or not. Much appreciated.

Facing same problem with Operational Risk sections also, where for e.g. they've listed betas recommended under standardized basel approach to calculate operating risk capital for business units - LOS states to "understand" and "explain" methods for calculating operating risk capital

 

[ShaktiRathore]

Hi
Wherever its mentioned "to calculate/compute" its neccessary/mandatory to memorise formula. If its mention describe or explain i think memorisation is not that important than understanding i mean how formula helps in understainding the topic. So whenever term calculate appears in Los u can infer it means to memorise the formula.
Thanks.

 

[marketmaker]

Makes sense - thanks for your reply.
I'll email GARP as well to see if they can shed some light on this too.

 

[ShaktiRathore]

Makes sense - thanks for your reply.
I'll email GARP as well to see if they can shed some light on this too.

Yes Garp do mention some definitions of keywords in Los in study guide. I think to calculate should mean to know formula by heart. You can get meanings of this keywords on net and understand what this keyworfs really mean. When i gave the exam i memorised almost all the formulas baring few complex odd ones.
Thanks

 

[sessil]

how can we get the AIM's material is it about the study guide you are mentioning.

 

[ShaktiRathore]

Yes Aims or Los are what constitutes Frm curricullum for exam are all in Study guide.
Thanks

 

[sessil]

thanks for this information

 

[srishti]

Hi

I am not able to locate the 2015 AIM statements. Can somebody help

 

[ShaktiRathore]

Hi
Please google for Frm2015 study guide all Aims are contained there. https://www.scribd.com/mobile/doc/249095361
Thanks

 

[srishti]

Hi Shakti
Please be assured I did my bit before putting this post.
Study guide on GARP website or the link mentioned by you does not contain the AIMS
not can I locate anything on google
It will be a favor if someone could help me with it at the earliest

 

[Abhishek...]

Download the Program Manual, it has the AIMS, for formulas concentrate on Calculate, Compute and Derive AIMS.

link is https://www.garp.org/#!/frm_study_materials/

 

[srishti]

Got it. Thanks.