Hard FRM Part 1 Practice Questions

64 free hard-difficulty FRM Part 1 questions, drawn live from KomFi's calibrated bank. These are the items that separate top scorers — every one carries a full explanation and trap analysis once you sign in.

1. If the oil market shifts from backwardation to a persistent contango, which of the following best describes th
2. If at the time of delivery S_1 = $72 and F_1 = $74, while the hedge was entered at F_0 = $78, what is the basi
3. If a 2-year swap has annual resets and the current 1-year and 2-year zero rates are 3% and 4%, why might the 2
4. In the context of interest rate derivatives, why must a forward rate extracted from the spot curve be adjusted
5. If the 2-year rate rises by 30 basis points and the 10-year rate falls by 20 basis points (with the 5-year rat
6. If the yields in the Treasury market increase significantly and the yield curve undergoes a parallel upward sh
7. In the context of Option Greeks and dynamic hedging, why does a delta-neutral portfolio consisting of short ca
8. What is the underlying price at the point where the trader loses exactly half of their initial investment at e
9. A European put option on a currency has a strike price of K… — What is the lower bound for this 1-year put opt
10. Assuming r and u are constant at 4% and 3% respectively, how does the curve shape change?
11. Over time, if the interest rates remain constant, what will happen to the 'forward points' as the maturity of
12. Which of the following is the most accurate method for valuing the floating leg between reset dates?
13. A commodity is currently in backwardation. A long futures investor rolling their position each month should ex
14. If the risk-free rate increases, which component of the in-out parity equation (c + Ke^-rT = p + S_0e^-qT) is
15. If the vanilla call is 15.00 and the corresponding up-and-out call is9.00, what is the current value of the po
16. A US company has a $25,000,000 BRL receivable in 120 days. Spot USD/BRL is 0.2000. Forward USD/BRL is 0.1950.
17. If the yield curve undergoes a significant non-parallel shift where long-term rates rise more than short-term
18. In a Money Market Hedge for a $1,000,000 TRY (Lira) receivable in 3 months, a firm borrows TRY at 40% annually
19. Ignoring counterparty effects, what has happened to the mark-to-market value of the trader's existing long for
20. If the correlation of losses between the two units is estimated to be ρ = 0.30, what is the total aggregate ec
21. If a portfolio has a Sharpe ratio of 0.60 and a correlation with the market of 0.80, what is the Sharpe ratio
22. If the trader was permitted to both execute trades and perform the end-of-day reconciliation for those same ac
23. If the units are perfectly negatively correlated (ρ = -1), what is the aggregate capital, and is this state ac
24. From a risk-typology standpoint, which characterization most accurately captures why standard daily VaR consis
25. Which response best reconciles the policy using the concept of comparative advantage in risk-bearing?
26. Per the standard risk-taxonomy framework for loss-absorbing capacity, what is the most serious flaw in the CRO
27. A 3 × 3 correlation matrix has eigenvalues λ_1 = 1.5, λ_2 =… — What does this indicate about the assets in the
28. A risk analyst is reviewing a correlation matrix for a three… — What is the primary implication of these resul
29. A stock's return follows a lognormal distribution. If the natural log of the price is normally distributed wit
30. A regression coefficient has a p-value of 0.024. Which of the following is the most accurate interpretation re

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