How To Prepare For The FRM Exam
Saturday, August 8, 2009
- 5 to 6 months of preparation time: FRM® Exam is a very tough exam, a reasonable estimate to prepare for the exam would be 200 hours for every Level or 400 hrs for Full exam. Depending on an individual's academic background and work experience, preparation for the exam would take approximately 5 to 6 months.
- Books to refer: GARPTM suggests that "FRM® Core Readings" and the Phillip Jorian Handbook should be referred for preparing for the Exam. Also one can refer to the Summarised material (Pristine Comprehensive Notes, Scheweser Notes, bionoc turtle etc). Summarised material may reduce your preparation time, but the Core readings & Phillip Jorian should be referred from time to time incase you are unable to solve the questions on a particular topic.
- How to allocate time: 70% of the preparation time should be spend on understanding the concepts and reviewing the material. 30% of the time should be spend on practicing last year question papers.
- Important Topics: it’s very difficult to say, as they cover almost all the topics , but do not leave the topics given below: VAR( practice all the online questions: last year around 20 questions on VAR) , Current events, Securitization & CDO (last year around 15+ questions), Linear regression, RAROC, Option pricing, Option Greeks, Duration & convexity, Swaps( practice atleast 2 questions), Credit Derivatives, Marginal & Cumulative probability in Credit risk, Expected Loss , Portfolio Variance Calculation, correlation & Covariance, Probability distributions, Skewness & Kurtosis , Normal Distribution ( how to calculate z, and area between two points), hedging with futures ( all the formulas for hedge ratio), Foreign exchange, Clean and Dirty price of bond (solve example), Put Call parity ( solve example),Delta Gamma hedging in options ( solve example), All ratios in portfolio management, Netting in credit risk, Rating migration in Credit Risk( solve example on what is the probability a bond will move from a rating to default status), Merton & KMV model, Credit exposure, Economic Capital, Basel guidelines, Loss distribution Approach in operational Risk, Beta, HFLS and LFHS risks, bottom up & Top down approach.
- Pattern of the exam: The exam is a practice – oriented exam , so they will normally test you on your concepts & fundamentals , around 40% questions may be on problem solving , even the theory questions are conceptual and cannot be answered by merely memorizing .
- The Calculators: HP or Texas, both are available in the market, the main functions that you have to practice are exponential, log and bond valuation( PV, NPV, FV, 1/Y, PMT, IRR ).
- Difficulty of Questions: the questions are designed by existing GARP members, the selection criteria for a question is the level of difficulty . So the questions will be very very difficult, also the time to answer every question is only 2.15 minutes.
- Prepare Summary Notes for revision: and practice questions on every topic as you complete the topics.
posted @ 10:13 AM,
5 Comments:
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At December 8, 2009 at 6:18 AM,
nellutla said...
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can you please give the address of those who are preparing for may 2009
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At October 28, 2012 at 1:20 AM,
said...
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Try www.eduleap.in for online test series for FRM. Very helpful.
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At February 23, 2018 at 11:45 AM,
Sanjay Saraf Educational Institute said...
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Thanks for sharing this article with us: http://www.ssei.co.in/courses/frm/part-1/
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At May 14, 2018 at 12:51 PM,
said...
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This blog is very informative and helpful. My web is FRM coaching in Kolkata
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At February 15, 2019 at 4:45 PM,
SSEI said...
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Thanks for sharing this great article with us. You can contact us to prepare for FRM Part 1 FRM Part II Take participate in live classes in Kolkata
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