Thanks David for all the scree casts n a very useful site. It was very helpful for this tough exam.

Maitreyi

Hi David,
I have to say that FRM 2008 exam was one tough exam.But the experience was unparalleled.What surprises me the most is most of the the new readings in 2008 FRM’s were not tested. Some questions outside AIMS were tested.
As most of them have said, the questions were very lengthy especially in the first half, the reason being that they were case study based.It took time to read the whole question understand what was given and what was asked. By the time you did this your 2 mins of time per question were over.Then you had to go to the choices and see which would be the right one.By this time you have already utilised 3 mins of time and if were not sure of the answer, you would leave it and then go to the next question. But when you came back to this question later(incase time was available) you read it again and and incase still don’t know you mark some answer. But the point here is that you have wasted a good 4-5 mins time and still not been able to answer it.I would say there were some good 8-10 questions of this type in the Ist session.
You were attacked with VaR questions right,left and centre.
The new topics which were not covered were:
(a) All the three chapters of Micheal Ong.
(b) What happened to quants in Aug 2007?
(c) Replicating Linear Clones.
(d) John Hull’s reading on Credit Derivatives.
(e) Chi-square & F test.
(f) Only one question on Subprime.

There were questions on Transition Matrices in Credit (eventhough there were no formal AIM on that).
Binomial Distribution etc.
The difference for this exam as compared to others is that the questions were application based. We are not aware how the testing is going to be. The samples questions in FRM 2008.2007 and 2006 are different as the testing in those exams were different as readings in those exams were different. I think the success for this exam is not how much of time you have allocated for reading the material, but how much time you have allocated for practicing innovative questions on new as well as important material.

David you done a fabulous job. I think new application based practice questions is the key.

I would say keep your fingers crossed for the exam results in Jan 2009.

All the best to one and all FRM takers.

Regards,
Sunil.

It is pretty good to see in the poll 8 people have said that their exam went well and 1 said it went very well. They must be brilliant and have taken maximum advantage of David’s notes. When can you say that one did well in this exam expecting 70-75% of 140 or what? I wanted to ask people who did well about how much they expect?

Can’t GARP provide 1 pencil and a good eraser after charging $700 for the exam??

Hello David:
This year is totally different. I guess GARP has pushed itself to the higher ground!! The exam is designed
by finance professors for sure. Therefore, it is academic approach instead of .... I think it is a transition moment
since It is biased to Corporate risk management I think. The answer is not as tough as others thought in the
first place since there are many ones are designed for not to be calculated in detail for the time constraint.
I still think the time is limited, especially the clock here is a little lousy and imprecise, we lost more than five
minutes in each session in local time. That is they should feel sorry for… Especially,I already spend more than four
full months without rest. They should give the best working guy some favors. But the quasi-past exam questions
are not easy to find in each session. I think it is a little pity for the hard-working guys. But those questions are
tough and intricate designed by finance professors. We should give them some plaudit.... But this year, those
questions are too long, many ones take more than two and half minutes to read over once, how can we answer
them in time?? Maybe GARP should consider to extend the test time after this one…
The exam is great compared to the PhD qualification, especially in the finance field...Therefore, people are not
familiar with corporate finance and financial theory may be a little disappointed. Those guys who are familiar
with the CFA exams will feel great disappoint for this exam since the question is too long and the answer is too
short. Of course, it is carefully designed and no past information can be used for this one.
Most important, I really read those materials several times, but it needs a good memory for all of them. This time
they have all been covered in the exam. Especially those new material. I guess this exam is a piecework by the
academic professors, especially the US finance academic society....
All in all, I am grateful to D.H. as his “due diligence” for the material preparation. It does help me a lot, especially
for a foreign not use English as the native language. The exam shows a grate challenge....
sincerely…
chris
(from a vanishing nation by OTHERS!!)

The exam was not so difficult, but we had way too few time to solve every question. I ended up guessing more than 10 questions in session 1 because there was less than 5 minutes left. Some questions took me more than 5 minutes to solve, others even more than 10 minutes. To me this exam was easier than the 2008 practice exam. I am sure I could have scored 90% if we had one more hour. Now I guess I scored around 75% (I picked “good” in the survey). Time management is so important!
I was disappointed to see so many detail questions on Basel. Many were not covered in the AIMs. GARP announced that we didn’t need to know the details on Basel. That was a wrong advise…
Also surprised to see difficult question on Qualifying SPE’s.
Amaranth question was in fact not about the case study on Amaranth but just an application of things we should know. The question on Binomial distribution could easily be solved using a binomial tree, so we didn’t need the Binomial distribution. The question about Poisson distribution I didn’t even try to solve because of time limitations. It seemed out of place.

Looking back, it was very good to have Bionic Turtle to have as study tool. It made me start on time, which is important as there is so much material to cover. For me, the screencasts and the flash questions were really helpful. Great work, David! The forum and excel applications to a lesser extent. It went often too much into detail, and the time spend on there does not pay off at the exam in my opinion. Most important to pass is to start early, get the intuition and to practice a lot.

Thanks David for all the support.
Exam was as tough as expected. But not beyond readings or our capacities.
May be the strategy of testing by lenghthiness and distractions may be minimized/avoided as FRM not purely a competitive/elimination exam.
QSPE was there but Amaranth, per se, was not there though mentioned in a lengthy descriptive question.
One must/should have absolute clarity on Greeks and Basels. I mean including all intricacies. Many go with overall idea and broad understanding only.
Repeated practice in Quant and application of imp. formulas will save time for other majority of subjective questions. Overall less calci was used.
I faced a peculiar problem(shall I name it ‘duality dilemma’). In most of the subjective questions say for about 40% of 140, I could easily eliminate two choices but was then struck with dilemma of choosing one from remaining two.

One question I remember on TROR.
A co. issues bonds of 300m - 6.5%. Enters into TROR on LIBOR+50bp. Payment semi-annually. At the end of a period there was 2% deterioration in assets and LIBOR was 4%. What is net flow?
a)net inflow 6m
b)net inflow 12m
c)net outflow 6m
d)net outflow 12m
What is wrong with my understanding because I felt it is 0.
Can somebody add/clarify the question or what I am missing.

Thanks to all.
Hope not to return to the forum next year.
But, will be happy, if had to return.

mudaltiru

One question I remember on TROR.
A co. issues bonds of 300m - 6.5%. Enters into TROR on LIBOR+50bp. Payment semi-annually. At the end of a period there was 2% deterioration in assets and LIBOR was 4%. What is net flow?
a)net inflow 6m
b)net inflow 12m
c)net outflow 6m
d)net outflow 12m
What is wrong with my understanding because I felt it is 0.
Can somebody add/clarify the question or what I am missing.??

Well Ur given Options are wrong.As far as i remember It was 9 million instead of 6M

And the answer is net outflow 9 million outflow...Here Inflow : 300*2.25(4+.5/2) = 6.75 million
Outflow : 300*.02(decreased in margin) + 300*.0325 = 15.25
Therefore 6.75 - 15.25 = -6 million .Here the trick was that they said “ decreased in margin of loan"(not asset deterioration) . here they used the margin term which needs to pay back to the Fixed reciever..I think...But the answer was : C

i did fail ...will be with bionicturtle for 2009 exam(

Were some questions changes in different papers? I thought that not everybody got the same exam they were jumbled up

I too thought this exam was too long and focused too narrowly as I felt a lot of the great stuff I learned while preparing for this exam through BT wasn’t tested or tested appropriately. 

I’ve worked in risk management at a bank in the interest rate risk group overseeing hedging and portfolio management of our fixed income and loan portfolios for over 3 years and have my CFA charter and I found this exam to be more difficult than any of the CFA exams I’ve taken. 

Perhaps it is just age getting to me, as I can no longer focus and force myself to focus through 2 entire 2.5 hour exam sessions.  Even though CFA exams were longer, the questions in the CFA exams, I thought were generally more theoretical, and those involving calculations were at least long case studies had at least had 2 to 3 questions that followed so that one didn’t spend 2 minutes reading the case and then have to reread again and spend 5 minutes just to end up guessing on one question because there is too much data that I couldn’t figure out where to start.  I’m sure if I had more time, the question wouldn’t have been as difficult, but there was no consistency in the exam format as some questions took over 5 minutes and some took 20 seconds so it was hard to manage time and not panic and stay focused during the last hour because if the last 20 questions on the exam are all long questions then there was no wasy one could finish, so I found myself not reading as carefully and skipping around…

Thus, I believe GARP, successfully, has made this exam biased towards those that are better at test taking.  It is just my opinion that test taking is a skill and a strategy that is learned from being in school or being in perpetual studies.  In my opinion, a recent PHD or MS in finance student, with no experience can do better on this exam than someone who has more work or practical work experience or studied with BT and knew the concepts well but may not have been as prepared mentally and strategically for this type of exam...I thought the keys to passing was maintaining focus, avoiding distractions, time management...At times, I felt I was taking an IQ test and I was exhausted. 

Overall, I enjoyed my experience here on BT, but if I did not pass, then that is it for me as I will not retake this exam in 2009.  I very much enjoyed learning and reading everything here in risk management, but I was very disapointed with the exam given by FRM.  I would have liked to see more questions applying VaR rather than those that required one to scale it from annual to daily or to 10-day and all in the meanwhile, remain composed that I’ve already spent 3-4 minutes on one question punching numbers into my calculator and still don’t have an answer yet.

Regarding the survey for this post, I voted my experience was “bad.” As far as how well I think I performed on the exam, I felt I was 70-75% in the morning session and perhaps 55-60% in the afternoon session.

Regards,
Chih

Thank you everyone for providing such *great* feedback about the exam. I have learned so much from these comments. I hope you all get to relax a bit now. Try not to judge only by your initial feeling: the exam is difficult. Every year, it is hard to find somebody who is very confident they passed.

I really want to improve BT for 2009. I think we need to do a better job in regard to practice questions. I am tempted to make that the first priority. One challenge, frankly, however is motivating people to start early preparation. I started very early in the year (e.g., with the screencast episode Questions) but, to tell the truth, for whatever reason, those early practice questions did not get much traffic. So, it is a two-fold challenge, I think: (i) We have to give more, better, and relevant practice questions but also (ii) we have to motivate candidates to start a bit earlier.

Do you agree? I am thinking of, for 2009, perhaps sending weekly/bi-weekly practice questions by email. This year I did send a bi-weekly email newsletter but it was a long thing with tips and then questions at the end. I got the feeling that few people found those helpful? Maybe I should make the newsletter focus about practice questions. Your feedback would be appreciated....

(I am hiring help to take all the historical sample questions, minus the bad ones, to publish them up. So we will hundreds more sample questions next year)

@Anil: You said, May be preparation material could have been more exam oriented! Agreed, we will focus on this.

@Rajababu: Thanks your for all the detail

@John (JOp): You have given awesome detail. I have already used some of this to give feedback to GARP. The transition/migration matrix is a good example. Currently (2008) it is implicit, we covered it, but you are correct, it was not explicit in the AIMs. I am confident GARP is receptive to further improvements in the Study Guide/AIMs so that testable ideas are comprehensively linked to assignments. And you saidy, “I think new application based practice questions is the key.” This seems to be the key message to BT, so I appreciate that.

@Ened: Given our previous email conversations, I must give you special thanks for your feedback. Your appreciation is maybe more than I deserve. What you said is especially helpful, I will be thinking hard about this: “For me, the screencasts and the flash questions were really helpful....The forum and excel applications to a lesser extent. It went often too much into detail, and the time spend on there does not pay off at the exam in my opinion” This is good to know...as you know, I think BT should have spent more time on questions.

@Vivek: no, same questions for everybody. I don’t know about sequence but everyone got the same exam.

Thanks again, David

I think Chih your exam was good and you will pass . You are getting overall 65-70% which is easy passing.
Vivek

Chih22 - I agree with Vivek. I bet you will pass. It may be hard to believe, but that is nearly as much confidence as you will find coming out of the exam. Please come back and tell us....David

Thanks Ankit. Answer must be C.

“And the answer is net outflow 9 million outflow...Here Inflow : 300*2.25(4+.5/2) = 6.75 million
Outflow : 300*.02(decreased in margin) + 300*.0325 = 15.25
Therefore 6.75 - 15.25 = -6 million .Here the trick was that they said “ decreased in margin of loan"(not asset deterioration) . here they used the margin term which needs to pay back to the Fixed reciever..I think...But the answer was : C “

It is outflow of 6.00+9.75=15.75 less inflow 6.75= correct answer net outflow of 9.00 million.

I was caught in the trick. Can u or David throw some light on ‘decrease in margin of loan’ and how it is equivalent to appreciation of loan(I mean why the co. should pay 6m for decrease in margin of loan).
Thanks
mudaltiru