Exam Feedback November 2016 Part 2 Exam Feedback

[frmpart2dan]

... how were we expected to manage our time when w/ hindsight and knowledge of the questions, we still can't agree on some answers (i.e., price jump and pension "relevant" risk)!

Yes I hope the pass mark will not be too high, anyone can do 50% with full certainty on this exam is admirable! The exam test a whole lot amount of knowledge in 4 hours and I feel GARP should not add tricks and traps and confusing things such as long reading to make it even worse, in reality we rarely need that much trick and trap in our daily job in Risk, bottom line is understanding the concepts that we need to know, not exam tricks!

 

[fjc120]

David, there were multiple item set questions much like the vignettes in cfa level 2. These completely threw me off guard. Also what is coco??? This drove me insane for three whole questions. Hopefully the curve comes through...this was unbelievably hard. I honestly thought i would crush it after practice exams.

 

[Johnkrause1]

I don't think there were that many tricks and traps, the questions were just extremely long winded with lots of information in them meaning it took a while to digest the problems and of course doing it under time pressure makes it all the more difficult. On top of that the exam involved so many new concepts and I believe it is that which made it difficult. I cant imagine the passing mark will be set that high on this one.

 

[frmpart2dan]

David, there were multiple item set questions much like the vignettes in cfa level 2. These completely threw me off guard. Also what is coco??? This drove me insane for three whole questions. Hopefully the curve comes through...this was unbelievably hard. I honestly thought i would crush it after practice exams.

The questions on CoCo are unfair as there is no where in the vignettes that it used the abbreviate term CoCo or describes the term, it is in short for Contingent Convertible and it is in the GARP AIM but then no practice question on any sources of the GARP reference books or notes have these calculation we need to do to crack the questions! I am very surprised there are these questions discussed in Chinese forum but found nowhere else, could this year questions come from some source in China? Also the netting question is similar to one found there, it is incredibly tricky to do in 5 minutes under exam condition unless you did some similar practice qns on that before

 

[frmpart2dan]

There was one question about lesson learnt for period 2007-2013 on commercial paper. I think I chose that option when investors are exiting the CP and ABCP, not sure if it is right?!

Another question asked what will reduce systemic risk of global CCP, I chose require collateral which is globally liquid, anyone has the same answer?

 

[intrepid86]

I

There was one question about lesson learnt for period 2007-2013 on commercial paper. I think I chose that option when investors are exiting the CP and ABCP, not sure if it is right?!

Another question asked what will reduce systemic risk of global CCP, I chose require collateral which is globally liquid, anyone has the same answer?

I agree with global collateral something. Regarding ABCP guess I marked something with regulatory exemptions because that was the main reason why they were issued heavily before subprime. Maybe I could be wrong

 

[Johnkrause1]

I

I agree with global collateral something. Regarding ABCP guess I marked something with regulatory exemptions because that was the main reason why they were issued heavily before subprime. Maybe I could be wrong

That was the right answer. It was use high quality and liquid government bonds or something as collateral

 

[fjc120]

For op loss reporting insurance coverage will not be taken.it is mentiined in schweser book and loss event should not include any expected reimbursements or disposal of assests

This might be a dumb question but should opportunity cost be included? I ignored insurance since there wasnt 20% of insurance anywhere in answers.

 

[frmpart2dan]

What u think will be the safe score to pass FRM part 2 .50% or more than that

For CFA safe score is 70% but this exam is way harder than CFA and material covered in L2 are more than any single level there and much deeper so I guess 40-45% would be a reasonable pass for this test

 

[frmpart2dan]

This might be a dumb question but should opportunity cost be included? I ignored insurance since there wasnt 20% of insurance anywhere in answers.

Yes opportunity cost must be included, I think answer is choice D (15 million)

 

[frmpart2dan]

Hm, pretty sure that was a liquidated var question *= SQRT((1+t)(1+2t)/6t). There were two 4s, a 6, and a 10 or something... I chose 6-something.

Whether you use sqrt12 or the formula there still lead to same answer as choice C (6 something)

 

[JVE]

Duplicate post.

 

[JVE]

Yes opportunity cost must be included, I think answer is choice D (15 million)

I disagree with that. Forgone revenue and opportunity costs are not normally included in OpRisk loss reporting.

 

[Johnkrause1]

This might be a dumb question but should opportunity cost be included? I ignored insurance since there wasnt 20% of insurance anywhere in answers.

I was struggling with w

Yes opportunity cost must be included, I think answer is choice D (15 million)

answer d 1550000 I think it was (all costs except the insurance premium)

 

[Eternity]

There was one question about lesson learnt for period 2007-2013 on commercial paper. I think I chose that option when investors are exiting the CP and ABCP, not sure if it is right?!

Another question asked what will reduce systemic risk of global CCP, I chose require collateral which is globally liquid, anyone has the same answer?

same answers!!

 

[Trueman]

How about this?

• Bank has a basket of 500 short CDS. Each CDS for $1.000.000 bond, which has a 4% probability of default. RR equals 0%. There is a 5% probability that at least 25 bonds go to default. Calculate credit VaR. Correct me who remember exactly if I'm wrong. I haven't any idea.
• Question about overcollaterization fund similar Table 9-1 in Malz. I think such type of question would be appropriate for Excel, not for TI BA II Plus and 3 minutes for each question.

 

[Eternity]

For CFA safe score is 70% but this exam is way harder than CFA and material covered in L2 are more than any single level there and much deeper so I guess 40-45% would be a reasonable pass for this test

I think that's quite unrealistic tho. A pure guessing test can score 25% marks alr.. i would say the safest passing score will be 60%, should be around 55%

 

[Eternity]

How about this?

• Bank has a basket of 500 short CDS. Each CDS for $1.000.000 bond, which has a 4% probability of default. RR equals 0%. There is a 5% probability that at least 25 bonds go to default. Calculate credit VaR. Correct me who remember exactly if I'm wrong. I haven't any idea.
• Question about overcollaterization fund similar Table 9-1 in Malz. I think such type of question would be appropriate for Excel, not for TI BA II Plus and 3 minutes for each question.

First one is 4,950,000, credit VaR
overcollaterization is which qns?

 

[Trueman]

what was the answer to the cybersecurity question? so many questions seemed to have more than 1 possible answer.

I like these answers in BT practice:
Correct answer (say) A, because.... Answer D is right too, but answer A is more appropriate

 

[frmpart2dan]

How to get that 49500000?