About the Exam :– FRM exam is held twice a year usually on 3rdSaturday of May and Nov. FRM Part 1 exam consists of 100 Multiple Choice questions on 4 subjects and time to solve is 4 hours. Unlike CFA exam question paper is not split / divided section wise. The questions from all four subjects appear together.
May 2017 Exam Review:- Exam was proper mix of concepts from all 4 topics, i.e. questions were asked from almost all chapters (few topics were tested more than once with slight variation). On an average 50 questions were theory and non-calculative questions the rest required calculations. Calculative questions were mix of long, short and average (W.R.T. time required to solve). In my opinion, it is very critical to take call in the exam on whether to solve Time Consuming Calculative Questions or skip it for the last. Overall paper was lengthy for an average candidate who come with moderate practice. Candidates reported that they blind ticked 10 to 12 questions on an average due to lack of time.
Subject 1: – Foundations of risk management: –
Exam Review:- Most of the questions were easily solvable for those candidates who had clarity and was able to recall the key concepts during the exam. However, CAPM and APT questions demanded more smart work than other questions. The emphasis is on the smart work that may be practiced but needed to be applied in the exam paper. Most of the questions, being theoretical, were solvable within 2 minutes.
Candidates feedback: – Many students came up with just one or two readings of this subject because of too much concentration on the quantitative topics and with a misjudgment that foundations of RM is easy, being theory. This led to situation where simple questions took more time to understand.
It should be noted that as the questions are less tricky when studied properly and can be solved in short time, hence good control over this subject can be game changer.
Subject 2: – Quants
Exam review: Questions from the basic topics such as probability and basic statistics were bit tricky and lengthy to solve on the other hand difficult topics such as ARIMA and Volatility were easy and straightforward.
Candidates feedback: – Some candidates lost the double battle on this subject. Well prepared topics were challenging to solve and topics which are difficult and less prepared were very easy to solve. Fun fact is that same question with different numeric was asked twice leading to double advantage or loss.
We personally believe smart work is very important in Study but it should not result in skipping topics.
Subject 3:- Financial Market and product
Exam Review:- Majority of the questions asked called for detailed understanding of the concepts. Those who had good conceptual clarity were able to manage this subject properly. Few questions came from the layer where one needs both intuition and knowledge of the subject.
Candidate feedback:– On an average candidates were happy with this subject and satisfied with their preparation to performance ratio. Except for few questions from fixed income and forex, rest was manageable.
Subject 4: – Valuation and Risk management: –
Exam Review: – From exam point of view, this portion was most interesting to analyze. Many questions were very easy and too lengthy to solve or very challenging to interpret and very short. Specifically, fixed income portion was very challenging to interpret.
Candidate feedback :- Candidates felt this portion difficult to manage reason being the challenges faced while preparing for VaR (putting VaR to work and measurement, Greeks BSM, Multi factor risk metrics). So these questions were approached with relatively low confidence levels. Despite the fact that many questions were easy, time management and confidence management issues were faced in the portion of fixed income (which was tricky).
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