Free GARP FRM-Part-1 Practice Exam Questions and Answers 2026

An analyst is currently considering a portfolio consisting of two stocks. The first stock, Remba Co., has an expected return of 12% and a standard deviation of 16%. The second stock, Labs, Inc., has an expected return of 18% and a standard deviation of 25%. The correlation of returns between the two securities is 0.25.If the analyst forms a portfolio with 30% in Remba and 70% in Labs, what is the portfolio's expected return?

An analyst is using key rate shifts to model the term structure of interest rates. For key rates the analyst has chosen the 1-year, 7-year, and 20-year yields. The rate changes that will have an e ect on a 5-year bond are:

A trader on the interest rate desk of a large bank entered into a customized 2-year interest rate swap contract on July 31, 2020, on a notional amount of USD 7.5 million. According to the terms of the swap, the bank received an annual fixed rate of 2.3% and paid an annual rate of SOFR as of the first day of the month of payment plus 1.95%. Payments were made every 6 months. The table below displays the relevant SOFR rates over the 2-year period:Date AND 6-month SOFR1-Jul-20: 0.11%1-Jan-21: 0.10%1-Jul-21: 0.05%1-Jan-22: 0.05%1-Jul-22: 1.52%Assuming no default, which of the following was the best estimate to the net amount that the bank paid or received on July 31, 2022?

Suppose that the single-monthly mortality rate (SMM) is equal to 0.004. The mortgage balance for a certain month is $100 million, and the scheduled principal payment for the same month is $2.5 million. What is the assumed prepayment amount for this month?

Jayce Arnold, a CFA candidate, is studying how the market yield environment a ects bond prices. She considers a $1,000 face value, option-free bond issued at par. Which of the following statements about the bond's dollar price behavior is most likely accurate when yields rise and fall by 200 basis points, respectively? Price will: