EXAM REVIEW - FRM PART I - NOV 2017 EXAM
Similar paper like earlier but few surprises were thrown by GARP in this attempt. It was in line with the expected benchmark, except for a few questions. Earlier exam review blog (FRM Part I May 2017 exam ) contains in depth analysis of each and every aspect of the exam which holds good for this attempt as well. Hence the focus of this blog is on the key highlights of this attempt and changes compared to the last attempt(May 2017).
TOTAL NO OF QUESTIONS - 100
SUBJECT WISE PROPORTION - AS PER GARP
GARP has provided weights of subject for exam purpose, which in turn means number of questions subject wise asked in exam.
PROPORTION OF QUESTIONS BASED ON DIFFICULTY LEVEL
GARP is well known for testing similar concept with various difficulty levels. Sometimes the same concept is tested in very straight and simple manner on the other hand GARP often makes the same concept too difficult to be solved. In this analysis we are providing with number of questions asked for respective difficulty levels.
Easy level:- (Skills required – conceptual clarity only) This set consist of questions tested on easy concepts in an easy manner without much of twist. We are including all theory questions which were straight and calculative questions which any one with conceptual clarity will be able to attempt. Questions belonging to this category which were asked in this exam are Binomial price calculation, VaR calculation using delta normal method & In theory Financial Disaster questions and country risk question ( based on concept which I had mentioned in my last podcast).
Average difficulty and required analytical thinking:- This category consist of the questions which are based on simple concept with twist which needs a bit of analytical thinking (Like CAPM or GARP Code of Conduct Question) or concepts which are based on difficult concepts but were asked in straight manner (like Key Rate Duration). This category has highest weight. You will find most of these questions covered in “Falcons 150 Most important questions booklet”. This booklet for May 2018 exam will be amended in which you will see commentaries of possible twists that GARP can make, and possible variations of same question wherever required and ways to solve it.
Difficult to Understand and Solve:- This category consist of the questions which are asked on core difficult concepts, or questions which are difficult to interpret or understand. Similar to May 17 exam in this attempt also major portion of this category is captured by ‘Quants’ chapters and ‘Fixed Income’ chapters. A successful candidate is one who can identify these questions and skip it without wasting time in the beginning. Also we will discuss how to manage these questions in our Lectures.
PROPORTION OF THEORY AND CALCULATIVE QUESTIONS
In this exam we could see a major change in this area. Generally for PART 1 GARP asks calculative questions on calculative concepts (Example BSM call/ put pricing) and theory questions on theory concepts. On the other hand in part II GARP asks theory or analytical theory questions on calculative/ numerical concepts which increases the difficulty level of question. This time GARP asked 15 – 20 % Questions in this format of ‘theory on calculative’ concepts which was surprising for us. In previous exams GARP asked approximately 5% of these type of questions. Soon we will upload specimen of these type of questions on our FB page and website.
Questions were doable for candidates who had conceptual clarity. Exam again proved that FRM is more about smart work and planning. Those who did accordingly are likely to get desired result. Students who were practicing too much of difficult questions, found that it was not worth the effort and time. Hence to clear such an exam, focus on conceptual clarity, do enough practice and remember key points.
Highlights of Questions asked
Option strategy – 1 Bear Spread – 1 Strangle – Case Study
2 – Risk Data Aggregation
2 GARP Code Of conduct
Regression -1 R2 and Adjusted R2 – 1 Correlation calculation ANOVA
Regression – 1 T Test
VaR – 1 Delta normal – 1 Changes in Confidence interval – 1 Simple Question
Greeks – Delta impact on Price
Bayes – Simple question
Volatility – 1 EWMA – 1 GARCH