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Formula sheet FRM 2

Thread starter #1
Good morning David and hope you are well. I have two general questions please.

I see some comments referring to your formula sheet for FRM 2? where is that saved? I am sorry, but have not been able to locate it. Would you please let me know as I think that would be very helpful.

With respect to standardized approach. Do we have to memorize the risk weight? For instance what risk weight a BB bond would have or an AA+, etc.

Very best,
SY
 
#2
yeah, I kind of remember I saw formula sheet(s) for FRM part 1 and/or part2. I might be wrong though.
Can somebody please put some links if they exist? I could not find them via search.
Thanks in advance.
 

David Harper CFA FRM

David Harper CFA FRM
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#4
Hi saritay Suzanne and I are working on it now (along with Stulz Ch 18). I hope to have updated formula sheets by this weekend (forum support is the random variable, unless forum support is massive, it should not be a problem). I will keep you updated, thanks,
 
Thread starter #5
That's great. It would be very helpful to put all the formulas and key concept in a formula sheet as you did for Level 1. Best, SY
 
Thread starter #7
Hi David,

Would you kindly get back to me regarding the second part of my question:

With respect to standardized approach. Do we have to memorize the risk weight? For instance what risk weight a BB bond would have or an AA+, etc.

Best,
S
 

David Harper CFA FRM

David Harper CFA FRM
Staff member
Subscriber
#8
Hi Saritay,

I am going to send a link to this thread (right now) to our GARP contact because your question is (very) common and maybe we can get some better direction. In the meantime:
  • Historically (back when the FRM had a less complex Basel to query!), I advised at least a superficial memorization of key cells of the table; e.g., 0% RWA for AAA-rated sovereigns (due to importance and controversy); 20% for AAA rated; corporates (incl. 100% for unrated!). Importantly, we had sample question precedents; e.g., the question I use in my video that asks for the capital charge for a AA-rated $10.0 million corporate exposure ($10 * 20% * 8%).
  • However, lately I have not seen such (sample) questions. Further, the AIM would appear to suggest that memorizing the Basel Credit Risk standardized approach table may not be necessary (although I think you could interpret this either way): "Describe and contrast the major elements of the three options available for the calculation of operational risk: Basic Indicator Approach; Standardized Approach; Advanced Measurement Approach." I suspect it's not the best use of a candidate's time; e.g., Basel III developments, not to mention IRB.
I will update if/when we hear back, thanks,
 
Thread starter #9
Hi David,

Wanted to follow up on the formula sheet. Have you already posted a link?

Also did you hear back from GARP re memorizing the risk weight.

Very best,
SAra
 

David Harper CFA FRM

David Harper CFA FRM
Staff member
Subscriber
#10
Hi saritay -
  • Suzanne is processing the formula sheets now (for upload, I have already edited them), they will be up by end of day .
  • No, they have not responded, I sent the email below on Wed 10/30:
Hi [my contacts]: This question is coming up often: “With respect to [Basel’s] standardized approach [for Credit Risk], do we have to memorize the risk weight? For instance what risk weight a BB bond would have or an AA+, etc.”

My latest view is reflected in my reply here (i.e., I think maybe the answer is ‘no’): http://www.bionicturtle.com/forum/threads/formula-sheet-frm-2.7364/#post-26611

If you have any guidance/input, we’d love it, I hope all is well, thanks!
 
Thread starter #12
Hi David,

I was wondering if you heard back from GARP regarding risk weights. Just wondering if I have to memorize them at this point.

Best,
S
 

David Harper CFA FRM

David Harper CFA FRM
Staff member
Subscriber
#13
Hi saritay, I have not heard back from that email i sent on 10/30, sorry. The best I can do is incorporate the question into my larger feedback document in the hopes it informs a more specific 2014 AIMs document (i.e., better guidance on whether RW% should be memorized), best,
 

Nicole Seaman

Chief Admin Officer
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#15
Hello, may I ask why the Level 2 formula sheet does not follow the study planner?
Hello @dbansal

We have not updated the formula sheets to coincide with the current curriculum yet. We are working very hard to prepare updated materials for the study planner, and the formula sheets are on our list to update.

Thank you,

Nicole
 

David Harper CFA FRM

David Harper CFA FRM
Staff member
Subscriber
#17
@dbansal GARPs syllabus/LO does not change between June and November (GARP's syllabus updates once a year: draft study guide/LOs are sent to EPPs in Sept/Oct, and candidates can generally access the 2018 LOs sometime in November).

But our material (BT) does indeed update; for example, we are currently updating videos primarily. But secondarily we are always working an "improvement" list: we are still adding 12 new practice questions per week (per the weekly PQ discipline); for several study notes, we make a second revision (e.g., add graphics); we add new and/or updated spreadsheets (which often become inserted in notes revisions: we've made a big push to more explicitly illustrate the hard quantitative concepts); and as the exam approaches, we will probably update the formula sheets because we are in a very good "position" this year w.r.t. content (Deepa is helping us this year, and she is fantastic). @Nicole Seaman correct me if missed anything? Thanks!
 
Last edited:
#18
@dbansal GARPs syllabus/LO does not change between June and November (GARP's syllabus updates once a year: drafts go to EPPs in Sept/Oct, and to candidates Nov). But our material (BT) does indeed update; for example, we are currently updating videos primarily. But secondarily we are always working an improvement list:
Thank you Mr. Harper!

I am going through all the videos now, just wondering what's on the list to be updated? Are they major updates? Just trying to avoid having to go back and re watch videos.
 

Nicole Seaman

Chief Admin Officer
Staff member
Subscriber
#19
Thank you Mr. Harper!

I am going through all the videos now, just wondering what's on the list to be updated? Are they major updates? Just trying to avoid having to go back and re watch videos.
Hello @dbansal

It may help you to read through our publishing process post here to get an idea of how we go about updating the study planner each year: https://www.bionicturtle.com/forum/threads/important-please-read-publishing-process-for-2017.10036/. This thread also includes links to the update threads, which list the materials that have been updated along with the date they were updated. We are planning on updating our entire video library, as we have not been able to focus on updating videos the past few years. You will see the videos that we recently updated on the update list, and we will continue to move through the study planner to prepare updated videos until the November exam approaches.

Thank you,

Nicole
 
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