Medium FRM Part 1 Practice Questions

199 free medium-difficulty FRM Part 1 questions, drawn live from KomFi's calibrated bank. The exam backbone: the difficulty band where most scoring happens.

1. What is its approximate yield to maturity (YTM)?
2. What is the Expected Loss (EL)?
3. If market yields rise by 150 basis points (0.015), what is the estimated new price of the bond using both dura
4. If the correlation of losses between the two units is estimated to be ρ = 0.30, what is the total aggregate ec
5. According to the Capital Asset Pricing Model (CAPM), what is the project's Jensen's Alpha?
6. An analyst regresses a stock's excess returns against the Fa… — What is the best interpretation of this differ
7. Which pricing framework is most flexible for incorporating these specific macroeconomic risks?
8. An investor adds a momentum factor (WML) to a Fama-French three-factor model. This new model is commonly known
9. What is the calculated Sortino Ratio?
10. A portfolio has a Sharpe ratio of 0.50. If the investor adds leverage by borrowing at the risk-free rate to do
11. If the correlation between the portfolio and the new asset is 0.0, and the manager allocates 20% of the funds
12. A risk professional is assessing the 'Hedging Paradox.' According to the Modigliani-Miller theorem, why would
13. In a CAPM context, what fraction of the stock's variance is systematic?
14. A stock trades at S_0 = $100. A European call struck at K = $100 expires in 1 year. If the volatility is 20% a
15. If a portfolio has a Sharpe ratio of 0.60 and a correlation with the market of 0.80, what is the Sharpe ratio
16. In a scenario where an investor is considering adding a new fund to an existing, well-diversified portfolio of
17. In the context of Modern Portfolio Theory, if an investor adds a risky asset to their portfolio that is perfec
18. In the Fama-French three-factor model, the factor HML ('High Minus Low') is designed to capture the risk premi
19. In the hierarchy of risk governance, which of the following relationships correctly identifies the standard co
20. Under the GARP Code of Conduct, if a risk manager becomes aware that a colleague is deliberately falsifying ri
21. Under what specific condition will the Sharpe Ratio and the Treynor Ratio provide identical rankings for a gro
22. What is the cumulative probability of default by the end of year 2?
23. A 3 × 3 correlation matrix has eigenvalues λ_1 = 1.5, λ_2 =… — What does this indicate about the assets in the
24. What is the model's recall?
25. A call option has a delta of 0.60 and a gamma of 0.05. If the underlying stock price increases by $2, what is
26. A GARCH(1,1) model has α = 0.10 and β = 0.85. If the analyst wishes to double the speed of mean reversion whil
27. If the exposure at default (EAD) is $1 million, what is the unexpected loss (UL) assuming LGD is fixed?
28. Which critical value from the z-table is most appropriate?
29. An analyst notes that for a specific asset, the GARCH(1,1) parameters sum to α + β = 0.9995. If ω is very smal
30. An analyst performs a simple linear regression of asset returns Y on market returns X. If the sample covarianc

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