# FRM May2012 L1 exam feedback

Discussion in 'About FRM' started by AG, May 19, 2012.

1. ### AGMember

Hi everyone,

How was the FRM L1 exam. A friend of mine sat for the paper and she said it was brutal.

AG

2. ### muathabdallaNew Member

Hi, I done L1,i felt that it was ok lengthy a little bit but I hope and wish that I have done well and to clear it by the way I was able to finish only 88 question and others I did not have enough time or wasted good time on them without getting the right answer I blindly circle them just not to leave them blank hahahaha , some questions were direct and some I did not get answer no matter what I tried a lot of theory questions maybe 40+, I remember some list them down
- there was two question both with charts one about positive correlation or something I choose D as an answer( 1+) and the other one 4 scatter plotter was provided asking in which one you will invest?? I chosed (A) the least dispersion and positive corr
- One question asked for the U probability in binomial
- Question about which one is not operational risk I remember it was the one that talks about credit loss or something
- Risk management did not fail if .... I think it was if the firm sustained credit losses
- one about code I remember I had chosed D yes it was violated as they were intentionally not using latest bet practices
- one about the forward price of rice metric ( it wa having 600$and 90 as the on tract size .....I felt something was wrong about the question anyway I think I chosed 54880) - one aw talking about the DV01 it has two questions DV01 and another about Convexity I think the answer was - 22 don't remember but is it write to say (- xx) about Convexity or just we name it negative Convexity but to write (+xx) -The first question about binomial tree I did not know where I have done wrong I did not get answer - one requested covar. was it so direct??? or they got me in this ques. As they provide corr and the std A and std for b - SWAP fixed for floating and$ and MXN (100M fixed 4.5 discounted 6months libor 1.6 and floating 3 discounted 1.6+ libor of 1.6 exchange rate 12.5) I think the answer was receiving 100k in first 6 months not sure
- one talking about forward prices and provides two scenarios asking in which there is arbitrage profit I think I chosed bothas in the first the F<s exe rt and the second the F>S exe rt
- one about BSM assumptions I don't remember the choices or the answer
- one about multi regression analysis assumptions I thought the write one was independent is (homkadastick)
- one about regression formula asking which answer is right I think I chosed the answer that talks about 1000 unit of x then y will change by ...
- one about delta approximation var $at 95 % D .6 1000 option I think 600x price price diff. x 1.65 x std - toward the end question asking the call price I thought it was direct - one about forward price no arbitrage I remember it was$109 based on s exe r+storage- cinv t <= F<= s exe r+ storage t
-- one about exchange clearing process to ensure ... I think I picked the answer which talks about daily marking maybe it was A
- one about the second year spot rate for 2 year Bond I think it was 5.3%
- another one about the second year spot three years provided .. I really wasted a lot of time on this question and later it was out of the 12 question left not answered properly just circled

Good luck to all I hope I list good no of questions ...

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3. ### RobertMember

I thought it was quite difficult. Time was definitely a critical factor for me and seemingly everyone else who sat near me. I had the same experience as muathabdalla: there were about 12 questions that I had to blindly fill-in because there simply wasn't enough time. There were also another 10-15 where I was able narrow down the answer choice to two and then I had to make an educated guess. I would say there were roughly 60-70 questions where I'm 100% certain I responded correctly (just a guess). I don't know if that adds up to a passing or failing grade but I'm not at all confident I passed.

I was quite surprised at several things on the test:
- there were more than a handful of questions that were quite lengthy in both words and in the number of steps that were required to come up with a solution
- in general, many questions were considerably more difficult than the prior year's exams (e.g. FRM Handbook questions from past exams, old GARP exams, etc.)
- there seemed to be a heavy focus on regression (maybe it's just how I feel in retrospect having not done well on those questions)

That's my initial take... What about everyone else?

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4. ### Tom77New Member

Hi, in my opinion the exam wasn't brutal but super brutal. I mean why do they ask you every little detail about all possible models discussed in the books ? I mean there were words in questions i never heard of before in my life. LOL. I thought this would be a risk exam and the focus would be about calculating risk measures and not knowing every little thing about 1 Mio different models in exact detail ??? This doesn't make sense for me. And when you had to calculate something in the exam, it was just something else you had practiced so much. I would say practice exams from GARP were about 10% of the level of the exam??? I mean some killer questions are o.k. to get rid of those people who didn't learn, but just questions like these throughout the exam makes you feel like you know nothing despite you've learned 400-500 hours??? And at the end they event don't tell you what youve got wrong. Why dont they give you the exam afterwards and you can study where you`re faults were so you could improve on your weaknesses? For me a very disappointing experience so far !!!

5. ### Aleksander HansenWell-Known Member

I felt the exam was not that difficult, albeit it was certainly more difficult than the 2010-2012 mock exams.

Interestingly it also included Bayes formula - which was ok with me (technically you could solve it in at least 3 ways but Bayes' was most efficient.

The questions were wordy, and a lot of intermediate calculations were necessary, so if you get some if those wrong you error carries through.

Also, I was a bit surprised that several questions were "two-in-one" meaning that 2 questions are based off of the same info, and if you don't get the first question right you are unlikely to get the second right.

Lots of options material here, both in graph and text form; binomial, BSM, sensitivities, values, VaR and so forth

Optimal hedge, using values; duration/DV01

Duration, Convexity .. Pretty much e dry thing was covered, and a lot of people struggled big time with the fight against the clock.

Facilities complaint: no air-conditioning! GARP is so stingy.

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6. ### RobertMember

Aleksander,

Blame your facility, not GARP. The testing facility where I sat for the exam was frigid!

When you say "I felt the exam was not that difficult", what do you mean? It was not that difficult in relation to what? The actual exam questions were considerably more difficult than the questions I used for practice.

FYI, I have sat for actuarial exams, which are notoriously difficult, and I would say that the 2012 May Part 1 exam was as difficult as any of the actuary exams.

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7. ### Aleksander HansenWell-Known Member

I felt the exam was not that difficult, albeit it was certainly more difficult than the 2010-2012 mock exams.
In relation to David's extensive questions on all the topics as well as his mock exam

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8. ### Hend AbueneinActive Member

@Robert:
It's been established that GARP never published any previous exams questions. The ones in the handbook, even if referred to as "FRM 2008 question" would be 2008 practice exam questions. We had a lengthy discussion here on BT, David asked his connections in GARP and they confirmed. Not a question ever came out, except through the candidates feedback, like on this thread.
And, from my experience GARP's practice exams are NOTHING like the real thing. I think others would agree to this now.

Good luck everyone.

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9. ### RobertMember

Hend, I was under the impression that the Handbook questions were directly from past exams. The Handbook questions mention "FRM 2008 question #87" rather than just "FRM 2008 question". The fact that it states a specific question number lead me to believe it's from the actual exam. The 2010 Schweser material, which I also used as a source of practice questions for my studies, specifically mentions "from the actual 200X FRM exam". But if David had direct conversations with GARP about them not publishing any previous exam questions, then I guess I'm wrong.

Aleksander, I agree that the questions on the part I exam are not as difficult as the questions David provides. Unfortunately for me, I did not use those as a foundation for my study program (I only practiced with a sampling from David's questions).

Lesson learned (if I don't pass, though I'm still hopeful I did pass): I will use practice with David's questions the next time around.

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10. ### Aleksander HansenWell-Known Member

Also, good strategy would have been to skip to the last few pagest to pick the low-hanging fruits. Short, easy questions, and then work from there. I was working through it very strategically, and it seemed to work well. But who knows, maybe I got all the answers wrong

11. ### RobertMember

Hend,

I absolutely agree that the GARP practice exams are nothing like the real thing. Tom (above) mentioned that he thought the practice exam questions were 10% as difficult as the real thing and, while that may be somewhat of an exaggeration, I don't think he's too far off in the spirit of his assessment.

Even if I wind up passing Part 1 this time, I will definitely use BT's material as the primary source of my study material going forward. Simply put, the Schweser and Handbook material are insufficient.

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12. ### RobertMember

The last 10 or so questions were definitely low-hanging fruit, which is unfortunate for those who didn't manage to get that far and were forced to blindly guess. I wonder if GARP strategically placed the easier questions toward the end so people wouldn't get to them (conspiracy theory, I know, but stranger things can and do happen on professional exams - the Society of Actuaries does this on a lot of their exams too)? In general, I found the last 50 questions to be easier than the first 50.

13. ### valleranoNew Member

I think the test questions were rather similar to David's practice questions (but not a notch more difficult) and especially similar to his mock exam, ... no straigthforward formula usage but with some extra twist (which someone earlier noted). There were at least 2 theoretical questions which were exactly the same as in the garp sample questions and around 3 calculations which were identical in logic. For many of the questions, especially the ones involving options, I felt that just too much calculation was needed and not enough time ... and yes, I had to guess a lot after narrowing down to 2 ....If I had been able to answer all BT practice questions with 100% score than I would (have) surely pass(ed)... so a big thank you for David&team!!

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14. ### chris.leupold@baml.comNew Member

I agree with all of the above comments with the exception of Aleksander who sounds like he did great. This exam was bordering on exponentially more difficult than any of the practice exams GARP has provided: 2012 practice and the actual 2011 and 2010 actual exams. They tested similar concepts but in a much more nuanced and complex way. A great example was the question on the optimal hedge ratio for the coffee hedge but where you had to figure it out with respect to options on futures. Bionic turtle has been an incredible resource. But I got 20 out of 25 on David's mock exam or 80% correct. it will be a miracle if I get 60% correct on today's exam. I'll be happy if I got 50% correct.

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15. ### Rick81New Member

My humble thoughts....it was definitely a lot harder than the 25 practice questions that GARP so kindly gave us (I agree with David here, surely it wouldn't require too much effort for them to give us a proper mock exam, but i digress). I would say it was on par with David's mock exam for difficulty - a lot of scenarios which were slightly out of the norm, and styles of questions that I hadn't seen before. It started off with a few more challenging questions in the first 10, and that had me a little bit flustered (on difficulty and time), so then felt i had to overcompensate by rushing through some of the more straight-forward questions (hopefully without botching the calcs). Correct me if i am wrong, but did the 1st question on binomial pricing even provide the strike price?? (assumed ATM). There were definitely at least 5 gimme's of the exact question seen on their sample paper or from the topic summaries in the GARP texts, but that is probably no surprise. I did have to do a lot of 'process of elimination' answering as well.

I also noticed the pattern of answers on my answer sheet appeared to be not very random at all - almost no A's in the first 50, and some sets of B's or C's that were 4 in a row. Clearly the wiley old foxes at GARP have some sort of algorithm going on there.

Thanks to David and Suzanne for all their help.

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16. ### RobertMember

I agree, Rick. I would even go so far as to say the first 30 or so questions were the most difficult (though there were probably a few "gimme's" sprinkled in there) and that flustered me a bit. That's where I had to do most of my random-guessing.

I don't remember the specific question you're referring to on binomial pricing but I remember having difficulty with one of those questions (if I remember correctly, there were perhaps two or three binomial questions and there was one I couldn't solve due to the manner in which the question was presented as well as the lack of detail that was provided - maybe it's the same one you're referring to?).

I scored 72% on David's mock exam on the first try and I would say the actual exam was at least as difficult as David's, if not moreso (though I made sure I had mastered David's mock-exam questions going into the exam). My biggest issue was the style in which the questions were asked. As Chris mentioned above, the questions were asked in a nuanced and complex way. I was fully comfortable with the "coffee hedge ratio-type" questions going into the exam but GARP somehow managed to challenge my level of comfort with that one (read: I had to guess).

In general, I think GARP went the extra-mile ("extra kilometer", if you're reading this from outside the U.S.) in terms of asking questions in a complex manner. I found it troubling that some of the more difficult questions were correlated, "two-for-one"-type questions. If you managed to get the first question wrong, you were virtually guaranteed to get the second one wrong.

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17. ### qin841121Member

I managed to finish the exam in 1.5hrs and spend the next 2.5hrs looking around. There is about 5 questions I am unsure of.

But the afternoon exam is a killer. It is very difficult and theoretical.

18. ### Aleksander HansenWell-Known Member

One thing I did not like is that GARP seem to have some trouble understanding the issue of precision as well as significant digits. One question was way too 'liberally' rounded, possibly introducing confusion among the answer options, and whether one did the calc correct (e.g. I calculated one question from scratch 3 times to confirm my answer).

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19. ### qin841121Member

Yes, they should have not rounded off any numbers used as input as final answers.

I brought my water bottle in and nearly drink from it (That constitutes a violation:=( I don't understand why candidates cannot even drink water

20. ### qin841121Member

How did people get \$109 for the futures question? I put this and I thought it was wrong. Anyway, it was the closest.