FRM Exam Format 2024: Structure & Segments Overview | Zell

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      What Is The Exam Format For FRM

      Are you intrigued by the world of financial risk management? Do you aspire to become a Financial Risk Manager (FRM) and navigate the complex landscape of risk in the finance industry? If so, understanding the FRM exam format is your first step toward achieving this prestigious certification. In this comprehensive guide, we will dive deep into the structure of the FRM exam, providing you with valuable insights into its format, content, and what to expect. Whether you’re contemplating taking the FRM exam or are already on your journey to becoming an FRM, this article will equip you with the knowledge needed to excel.

      What is a Financial Risk Manager (FRM)?

      Financial Risk Management Certitfication is a global certification that’s accepted in the US, UK, Singapore and China, and other Asian countries. But since this course is fairly niche, your scope will be to analysis and management. Here are some of the job profiles you can explore on completion of this course. After the pandemic, it became essential for several companies to risk-proof their financial management. To do that it is necessary to have an in-house expert who can analyze all the financial statements of the company and understand the impending risk factors that can be eliminated. FRM is a niche profession to be in and brings exciting challenges for those who possess an interest in this field. 

      What is FRM Exam & Qualification?

      The FRM (Financial Risk Manager) exam is a globally recognized certification for professionals working in the field of financial risk management. It’s administered by the Global Association of Risk Professionals (GARP). The FRM qualification is highly respected in the finance industry and demonstrates a strong understanding of risk management principles, practices, and techniques.

      To obtain the FRM designation, candidates must pass a two-part exam series and meet certain experience requirements. Here’s a breakdown:

      • FRM Exam Parts:

      Part I: This exam covers the foundations of risk management, including quantitative analysis, financial markets and products, valuation and risk models, and risk management and control. It consists of 100 multiple-choice questions and is typically offered twice a year.

      Part II: Building upon Part I, this exam dives deeper into specific areas of risk management, such as market risk measurement and management, credit risk measurement and management, operational and integrated risk management, investment management, and current issues in financial markets. It also consists of 80 multiple-choice questions and is offered at the same times as Part I.

      • Experience Requirement:

      In addition to passing both parts of the exam, candidates must have at least two years of relevant work experience in risk management or a related field. This experience can be acquired before or after passing the exams.

      • Ethics Requirement:

      Candidates must also agree to abide by GARP’s Code of Conduct and Ethics. This includes maintaining the highest standards of professional conduct and integrity in the practice of risk management.

      • Continuing Education:

      Once certified, FRM holders are required to maintain their designation by completing ongoing professional development activities and adhering to GARP’s continuing education requirements.

      FRM Exam Topics & Weightings

      The FRM Exam, offered by the Global Association of Risk Professionals (GARP), is a rigorous test designed to assess your knowledge and skills in risk management. It consists of two parts: Part I and Part II. Let’s delve into each of them:

      Part I: Foundations of Risk Management

      Format: 

      • Multiple-choice questions (MCQs)
      • 100 questions in total

      Duration

      • Four hours

      Topics Covered:

      • Foundations of Risk Management
      • Quantitative Analysis
      • Financial Markets and Products
      • Valuation and Risk Models

      Pass Rate: 

      • Approximately 45-55%

      Part II: Risk Management and Investment Management

      Format

      • Item Set Questions (complex scenarios with multiple questions)
      • 480 questions in total

      Duration

      • Four hours

      Topics Covered:

      • Market Risk Measurement and Management
      • Credit Risk Measurement and Management
      • Operational and Integrated Risk Management
      • Risk Management and Investment Management
      • Current Issues in Financial Markets

      Pass Rate: 

      • Approximately 55-65%

      Preparing for the FRM Exam

      Now that you’re familiar with the FRM Exam’s structure, let’s discuss how to prepare effectively:

      1. Study Materials with Recommended Resources:

      • GARP’s official FRM Study Guide
      • Third-party prep providers (e.g., Schweser, Bionic Turtle)
      • Practice exams and question banks

      2. Study Plan with Key Steps:

      • Create a study schedule with daily and weekly goals.
      • Allocate more time for areas where you need improvement.
      • Consistently review and revise previously covered topics.

      3. Practice Questions with Importance of Practice:

      • Solve a wide range of practice questions to reinforce your understanding.
      • Familiarize yourself with the exam format and question types.
      • Identify weak areas and focus on improving them

      4. Mock Exams with Simulate the Real Exam:

      • Take full-length mock exams under timed conditions.
      • Analyze your performance and identify areas of concern.
      • Adjust your study plan based on mock exam results.

      5. Study Groups with Collaborative Learning:

      • Join or form study groups to discuss concepts and solve problems.
      • Explaining concepts to others can deepen your understanding.

      6. Stay Healthy and Mental Well-being:

      • Get adequate sleep and maintain a healthy diet.
      • Manage stress through relaxation techniques.
      • Stay motivated with a positive mindset.

      Understanding the FRM Exam Format

      Sample FRM Exam Questions

      1. Which of the following is an example of a credit risk mitigation technique used by financial institutions?

      • a) Asset-liability management
      • b) Value at Risk (VaR) modeling
      • c) Collateralized debt obligations (CDOs)
      • d) Mark-to-market accounting

      Answer: c) Collateralized debt obligations (CDOs)

      2. An investment portfolio with a high degree of liquidity risk is most likely to have:

      • a) Low turnover in assets
      • b) A high proportion of long-term investments
      • c) A high proportion of short-term investments
      • d) Low volatility in asset prices

      Answer: c) A high proportion of short-term investments

      FRM Fees & Certification Cost

      If you’ve decided to take up Financial Risk Management as a career and have made up your mind to pursue the course for it, you might want to know more about the total registration fee and certification cost. 

      FRM Part 1

      1. For New Candidates (Early Registration)

      Registration closes by Jan 21, April 30, 

      Enrollment Fee USD 400

      Exam Fee USD 600

      Total: USD 1000

      2. For Returning Candidates

      Register by March 31, April 30

      Enrollment Fee USD 400

      Exam Fee USD 800

      Total: USD 1200

      FRM Part 2

      1. For New Candidates (Early Registration)

      Registration closes by: January 31, April 30

      Exam Fee USD 600

      2. Standard

      Registration opens by: March 31, May 1

      Exam Fee USD 800

      FRM Exam Dates And Registration Deadlines

      The FRM (Financial Risk Manager) exam is typically offered twice a year, with exam dates scheduled in May and November. Registration deadlines for each exam vary depending on the exam date and whether you are a first-time registrant or a returning candidate. Here’s an overview of the typical FRM exam dates and registration deadlines:

      May Exam Date:

      • Registration for the May exam usually opens in late January or early February.
      • The early registration deadline is typically in late February or early March.
      • The standard registration deadline is usually in late March or early April.
      • Late registration deadlines are available for an additional fee and typically extend until mid-April.

      November Exam Date:

      • Registration for the November exam typically opens in late June or early July.
      • The early registration deadline is usually in late July or early August.
      • The standard registration deadline is typically in late August or early September.
      • Late registration deadlines are available for an additional fee and typically extend until mid-September.

      It’s essential for candidates to register for the FRM exam before the registration deadlines to avoid late fees or missing out on the opportunity to take the exam. Additionally, candidates should plan ahead and allow sufficient time to prepare for the exam thoroughly.

      What Are The FRM Exam Requirements?

      • The educational requirements for FRM exams include a bachelor’s degree from an accredited college or university or the candidate should be in their final year of college.
      • Candidates must have at least two years of work experience in risk management related fields, part-time and internships won’t be counted as part of the experience.
      • The candidate must abide by all of GARP’s code of conduct and ethics mentioned.

      How Will Zell Help You

      At Zell, we’re committed to supporting your FRM Exam journey. Here’s how we can assist you in achieving your certification goals:

      Comprehensive Study Materials

      • In-depth study guides covering all FRM topics
      • Practice exams with detailed explanations
      • Question banks to reinforce your knowledge  

      1. Personalized Study Plans

      • Our platform allows you to create a personalized study plan tailored to your needs. You can set goals, and track progress, and FRM study material based on your performance.

      2. Mock Exam Simulations

      • Prepare for the real exam by taking our mock exams, which closely mimic the FRM Exam format. Receive detailed feedback and performance analysis to fine-tune your preparation.

      3. Community Collaboration

      • Join our thriving community of FRM candidates to engage in discussions, share study strategies, and gain valuable insights from peers.

      Benefits Of FRM Certification

      • Part I assesses your knowledge of foundational concepts in risk management. It covers quantitative analysis, financial markets, and risk models. 
      • This part provides a solid understanding of the basics, preparing you for more complex scenarios in Part II.
      •  Function I serves as the foundation upon which your FRM journey is built. It assesses your knowledge of essential risk management concepts and principles.
      • Part II delves into the practical application of risk management techniques. It challenges your ability to analyze complex situations and make informed decisions. 
      • With a focus on market risk, credit risk, and operational risk, this part is a true test of your risk management skills.
      • Part II of the FRM Exam is where the rubber meets the road. It goes beyond theoretical knowledge and challenges you to apply risk management principles to complex real-world scenarios.

      Conclusion

      In this comprehensive guide, we’ve explored the FRM Exam format, including the structure of Part I and Part II, preparation tips, and sample questions. Remember that success in the FRM Exam requires dedication, consistent effort, and the right study resources. With the right preparation, you can confidently tackle the exam and take a significant step in your career as a Financial Risk Manager.

      If you’re ready to embark on your FRM journey, Zell Education is here to support you every step of the way. Prepare effectively, stay motivated, and aim for success in this challenging yet rewarding endeavor.

       

      FAQs:

      1. What is the FRM Exam pass rate?

      The pass rate for each part of the FRM Exam is a topic of significant interest to aspiring candidates. It’s important to understand that this pass rate can vary from year to year due to factors like the difficulty level of the exam. On average, the pass rate typically falls within the range of 45% to 65%. This range may seem wide, but it reflects the varying complexity of the exams over time.

      2. How long should I study for the FRM Exam?

      The amount of time you dedicate to studying for the FRM Exam is a critical factor in your success. While there’s no one-size-fits-all answer, allocating between 300 to 400 hours of study time for each part of the FRM Exam is generally recommended. This suggests that your total preparation time may range from 600 to 800 hours if you plan to take both parts.

      3. Can I take both Part I and Part II of the FRM Exam on the same day?

      No, the FRM Exam is divided into two parts, and it’s a requirement that you pass Part I before attempting Part II. This sequential approach is designed to ensure that candidates have a solid foundation in the fundamental concepts of risk management before moving on to the more advanced and applied aspects covered in Part II.

      4. How much does it cost to register for the FRM Exam?

      The cost associated with registering for the FRM Exam is an important consideration for candidates. While the exact fees can vary, the registration fee for each part of the FRM Exam typically falls within the range of $750 to $950. These fees cover the cost of exam administration and other related expenses.

      5. What is the validity of the FRM certification?

      Once you’ve successfully earned the FRM certification, it does not have an expiration date. However, there is a crucial requirement to maintain your active FRM status. To do so, you must pay an annual membership fee to GARP. This fee supports ongoing professional development and helps you stay updated with industry advancements, ethics, and best practices.

      6. How do I get FRM certification?

      You can choose a coaching institute like Zell Education that would take of your entire CFA journey from registration to placement.

      7. Is the FRM exam difficult?

      Yes the FRM exams aren’t a piece of cake to clear. The pass rate typically falls within the range of 45% to 65%. This range may seem wide, but it reflects the varying complexity of the exams over time.

      8. Is FRM worth it?

      Yes, if you have a keen interest in risk management and detecting frauds, then the Financial Risk Management course is worth it, as it also has a great scope in India and around the world.

       

      Satyamedh Nandedkar, a seasoned finance professional, holds ACCA, CA, US CMA & CS credentials. With 10+ years of experience, he’s a master ACCA tutor, IFRS trainer, adept in global financial standards, and a trusted advisor in navigating complex financial landscapes.

       

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