Medium Frm Part 2 Practice Questions

214 free medium-difficulty Frm Part 2 questions, drawn live from KomFi's calibrated bank. The exam backbone: the difficulty band where most scoring happens.

1. A bank utilizes a 'through-the-cycle' (TTC) rating system. During a sharp economic downturn, what behavior sho
2. If the Area Under the Curve (AUC) from the Receiver Operating Characteristic (ROC) is 0.85, what is the calcul
3. A Merton-style structural credit model treats a firm's equit… — In this framework, what does the strike price
4. For a derivatives portfolio, which Counterparty Credit Risk (CCR) metric is primarily used for setting interna
5. In the comparison of rating system philosophies, which system is characterized by stable ratings that rarely m
6. A bank enters into a pay-fixed interest rate swap with a hedge fund. If the swap significantly reduces the dir
7. Which of the following is an example of RWR?
8. According to the Merton structural model of credit risk, equity holders can be viewed as holding which of the
9. If the risky annuity (RPV01) is 4.2 and the par spread is 150 basis points, what is the value of the protectio
10. Which of the following best describes why CVA or capital charges still apply?
11. What is the most likely impact on the bank's reported fair value of its derivatives portfolio and its Common E
12. A risk analyst is pricing a new credit-sensitive derivative.… — What is the most likely reason for this?
13. A risk practitioner calculates the 'incremental CVA' of a ne… — Under what condition can this incremental CVA
14. How does an 'Overcollateralization (OC) Test' in a Collateralized Loan Obligation (CLO) protect senior notehol
15. In a Central Counterparty (CCP) default waterfall, which component is typically the first line of defense used
16. In securitization, why is 'excess spread' considered a 'flow' rather than a 'stock' of credit enhancement?
17. In the Basel III regulatory framework, the Exposure at Default (EAD) for counterparty credit risk under the In
18. In the context of the Merton model, why is the 'Distance to Default' (DD) usually mapped to an empirical distr
19. The Basel III CVA capital charge was primarily introduced to address:
20. The Basel IRB capital formula (Vasicek model) assumes an 'as… — What is the primary implication of this assump
21. When computing the Credit Valuation Adjustment (CVA) for a counterparty, which probability distribution should
22. A bank discovers that its internal rating system shows very stable ratings over time despite economic cycles
23. Which resource is typically the *first* to be used after a defaulting member’s own margin and default fund con
24. A Central Counterparty (CCP) manages a member default. According to the standard 'default waterfall' architect
25. Which of the following is the best example of SWWR?
26. What is the most likely impact on the bank's total netting-set CVA after adding the trade?
27. Which of the following actions is correct according to the model's design?
28. A Chief Risk Officer is reviewing the 'Three Lines of Defens… — Which line of defense is this team part of?
29. A 2-year cumulative PD is calculated using a 1st-year transition matrix M. A 'red-herring' piece of data is pr
30. If the original CVA was $10m, what is the new CVA after the adjustment, assuming CVA scales linearly with EAD?

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