jyothi1965
New Member
David
before these thoughts get out of mind, I have penned down something which I hope will be useful to all members.
As expected. FRM 2007 was a toughie - it seems that GARP is getting tougher - very few questions were straightforward. there were a couple of black swans too. But the paradox is like this: if you happen to be very well prepared, you understand the question and try to solve it - but you run into a time problem. If you are unprepared - well time is not a constraint but then getting it right is an issue.
I think the applied nature of the questions, the compounded options and the reasoning skills needed over and above domain knowledge have not been highlighted as part of the FRM strategy. More often than not students have focused only on acquiring domain knowledge leaving out other skills needed. (problem solving and reasoning)
will write separately to you on some issues
Jyothi
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FAQs on FRM 2007
How connected are the LOs and the questions?
The questions are a form of applying your risk thoughts – so that is why GARP perhaps calls is Applying Instructional Materials (AIMs) – they are not directly or linearly connected to the underlying which is the LO. You will really have to know how to reason and think though choices.
Questions – Simple or compounded?
By and large the questions are compounded (meaning you have to search for multiple answers), which makes it more difficult than a direct question with a simple answer.
Domain Knowledge?
Knowledge of risk management is vital (goes without saying) – but reasoning skills and English language skills are equally important. How else will you decipher questions like “NOT important†“Least Important†etc Logical reasoning is embedded in many questions and often you falter in eliminating wrong choices because of poor reasoning skills.
Race Against Time?
In India, students are aware of CAT (common admission test) for the MBA programmes – one of the toughest exams in the world. It is a huge race against time. FRM is similar – it is designed so that time is short. How short?
It all depends on your speed and the way you attack questions. In CAT a proven tactic is to go against the order and solve questions in a random fashion. This is very evident in FRM also. The easy questions were 131-140, and hidden in between. The first three questions were the toughest in the entire exam. So watch out!!!
Number Crunching ability – How serious?
Dead, dead serious on this. Unless you can solve questions in a jiffy – don’t even think of taking the exam. This should be a wide variety of question types – from all areas of risk management. You should be a top pro in problem solving. This is ABS ABS important.
Any clustering of questions?- predictability?
Questions are probably handcrafted with loving care by GARP’s academic team (probably spend months in developing choices so that you make all the mistakes that they want you to make).
Clustering is not evident. But a few clusters with high repeatability that I have noticed:
1. Options trading strategies
2. RAROC
3. VAR – sq root,
4. Hedging
5. Basel
6. default risk (especially transition matrices)
7. Financial instruments – all kinds of complicated questions – forex, swaps, pension surplus,
But expect fat tails in the questions a good number - of these you will probably be seeing for the time!!
Pass or fail?
Since it is relative grading you can’t say anything. But the logic is:
If in every year a greater proportion of unprepared students are taking the exam and you happen to be better prepared than the average, your chances are better off.
The reason is that these guys will push down the percentiles so that you come out with a better percentile. You have to hope that everybody else around you does poorly so that you can have outperformance even with your poor preparations!!.
GARP says that around 40-45% of those who take the exam make it finally – but the numbers don’t seem to add up – since inception there are only 10,800 members which makes it roughly 1000 (per year) from 1996-2007. (Of course this average has no meaning – but this is just a way of analysing).
At the end of the day, FRM exam is genuinely a tough nut to crack:
• Race against time – (were you aware of this?)
• Need to have very well developed problem solving and reasoning skills
• High level of domain knowledge - Ability to recognise the underlying LO and find out whether you are ITM, or OTM.
• Last few weeks can make a huge difference – know how to peak on the day of the exam
• Ability to recall instantaneously comes with absolute familiarity with the subject – unless you know risk management like the back of the hand – don’t even think of sitting!
• Sustainability – you can relax even for a minute – the pressure is continuous from morning till afternoon – after some time you just want to give up!! DON’T!!
Lastly one thing about BT. Yes, the stuff on this portal is far superior than what you get elsewhere – but the most important resource is David himself – he is a great mentor. Learn to think through concepts like he does.
Over a period of time the blocks begin to fit
before these thoughts get out of mind, I have penned down something which I hope will be useful to all members.
As expected. FRM 2007 was a toughie - it seems that GARP is getting tougher - very few questions were straightforward. there were a couple of black swans too. But the paradox is like this: if you happen to be very well prepared, you understand the question and try to solve it - but you run into a time problem. If you are unprepared - well time is not a constraint but then getting it right is an issue.
I think the applied nature of the questions, the compounded options and the reasoning skills needed over and above domain knowledge have not been highlighted as part of the FRM strategy. More often than not students have focused only on acquiring domain knowledge leaving out other skills needed. (problem solving and reasoning)
will write separately to you on some issues
Jyothi
-------------------------------------------------------------------------------------------
FAQs on FRM 2007
How connected are the LOs and the questions?
The questions are a form of applying your risk thoughts – so that is why GARP perhaps calls is Applying Instructional Materials (AIMs) – they are not directly or linearly connected to the underlying which is the LO. You will really have to know how to reason and think though choices.
Questions – Simple or compounded?
By and large the questions are compounded (meaning you have to search for multiple answers), which makes it more difficult than a direct question with a simple answer.
Domain Knowledge?
Knowledge of risk management is vital (goes without saying) – but reasoning skills and English language skills are equally important. How else will you decipher questions like “NOT important†“Least Important†etc Logical reasoning is embedded in many questions and often you falter in eliminating wrong choices because of poor reasoning skills.
Race Against Time?
In India, students are aware of CAT (common admission test) for the MBA programmes – one of the toughest exams in the world. It is a huge race against time. FRM is similar – it is designed so that time is short. How short?
It all depends on your speed and the way you attack questions. In CAT a proven tactic is to go against the order and solve questions in a random fashion. This is very evident in FRM also. The easy questions were 131-140, and hidden in between. The first three questions were the toughest in the entire exam. So watch out!!!
Number Crunching ability – How serious?
Dead, dead serious on this. Unless you can solve questions in a jiffy – don’t even think of taking the exam. This should be a wide variety of question types – from all areas of risk management. You should be a top pro in problem solving. This is ABS ABS important.
Any clustering of questions?- predictability?
Questions are probably handcrafted with loving care by GARP’s academic team (probably spend months in developing choices so that you make all the mistakes that they want you to make).
Clustering is not evident. But a few clusters with high repeatability that I have noticed:
1. Options trading strategies
2. RAROC
3. VAR – sq root,
4. Hedging
5. Basel
6. default risk (especially transition matrices)
7. Financial instruments – all kinds of complicated questions – forex, swaps, pension surplus,
But expect fat tails in the questions a good number - of these you will probably be seeing for the time!!
Pass or fail?
Since it is relative grading you can’t say anything. But the logic is:
If in every year a greater proportion of unprepared students are taking the exam and you happen to be better prepared than the average, your chances are better off.
The reason is that these guys will push down the percentiles so that you come out with a better percentile. You have to hope that everybody else around you does poorly so that you can have outperformance even with your poor preparations!!.
GARP says that around 40-45% of those who take the exam make it finally – but the numbers don’t seem to add up – since inception there are only 10,800 members which makes it roughly 1000 (per year) from 1996-2007. (Of course this average has no meaning – but this is just a way of analysing).
At the end of the day, FRM exam is genuinely a tough nut to crack:
• Race against time – (were you aware of this?)
• Need to have very well developed problem solving and reasoning skills
• High level of domain knowledge - Ability to recognise the underlying LO and find out whether you are ITM, or OTM.
• Last few weeks can make a huge difference – know how to peak on the day of the exam
• Ability to recall instantaneously comes with absolute familiarity with the subject – unless you know risk management like the back of the hand – don’t even think of sitting!
• Sustainability – you can relax even for a minute – the pressure is continuous from morning till afternoon – after some time you just want to give up!! DON’T!!
Lastly one thing about BT. Yes, the stuff on this portal is far superior than what you get elsewhere – but the most important resource is David himself – he is a great mentor. Learn to think through concepts like he does.
Over a period of time the blocks begin to fit
. There are usually two movies per topic (part 1 and part2). If I may, I request David to include a third movie (90 minutes or so) per topic to work through the (sample/last few years') questions - 2 easy ones and 7 tough / compound questions. Also, just the way there are pdfs consolidating the formulae, another pdf consolidating the relationships/graphs too would help.