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Exam Feedback October 2020 Part 2 Exam Feedback

Nicole Seaman

Director of FRM Operations
Staff member
Subscriber
We hope that everyone did well on the FRM Part 2 exam on Saturday! :) We would love to hear any feedback that you have about the exam. How did it go? Did you encounter unexpected questions? How was the experience with all of the new COVID rules? Thank you in advance for any feedback you can provide!

Update: The pass rate for the Part 2 October exam is 62%

Update on October Exam Results

In case there is any confusion as to when the October exam results are being released, this is on the GARP website. It shows that the results will now be released on December 4th. As stated in one of my posts above, trying to figure out if something on the website means that you passed or failed is not accurate. I do not recommend relying on anything you might find when logged into your GARP account until the official results are released. The hacks and tricks have been tried for a number of years, and they are not accurate. They just cause more stress for everyone. The glitches on the GARP website happen every year right before the results are released. :/

garp.jpg
 
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mcrisk7

Member
Hello all,

attended the exam in Frankfurt on Saturday.

I scored 76.25 % in BT mock exam 2020 on my first attempt. Further I did the GARP Practice Exam 2020 and two Schweser 2019 Practice Exams, scoring 67.5 %, 62.5 % and 56.25 % (Schweser questions were poorly written in several cases), respectively, which leads to an average of 65,63 ±7.32 %. All practice exams were done with a mask and 4 hours time restriction (by the way for the real exam we did not get any GARP provided masks as stated on the GARP website. Used my own). Overall I had a good feeling prior to sitting for the exam (without being overconfident).

After exiting the exam room on Saturday I felt exhausted without being sure if I will make it. The questions were long and very tricky (only a few were straightforward). It was definitely a tough exam! I screwed up a couple of numerical problems but at least I am quite sure having more numericals correct than I had wrong (at least of those recalling hours after the exam). When it comes to the qualitative problems (and there were many of them) I can not say that much. Just tried to exclude those answers which made no sense to me, where often the two remaining answers seemed to be equally “right”. Especially as a non-native speaker I found them to be daunting. In addition I had to blindly guess 5-8 questions in the last 3 Minutes before the exam ended.

In summary I felt the real exam to be significantly more difficult than all practice exams I’ve ever did, which leaves me with a feeling of not having scored enough for a pass. For now, I can’t do more than wait for my results.

Kind regards
 
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danielpys

New Member
Hello all,

attended the exam in Frankfurt on Saturday.

I scored 76.25 % in BT mock exam 2020 on my first attempt. Further I did the GARP Practice Exam 2020 and two Schweser 2019 Practice Exams, scoring 67.5 %, 62.5 % and 56.25 % (Schweser questions where poorly written in several cases), respectively, which leads to an average of 65,63 ±7.32 %. All practice exams where done with a mask and 4 hours time restriction (by the way for the real exam we did not get any GARP provided masks as stated on the GARP website. Used my own). Overall I had a good feeling prior to sitting for the exam (without being overconfident).

After exiting the exam room on Saturday I felt exhausted without being sure if I will make it. The questions where long and very tricky (only a few where straightforward). It was definitely a tough exam! I screwed up a couple of numerical problems but at least I am quite sure having more numericals correct than I had wrong (at least of those recalling hours after the exam). When it comes to the qualitative problems (and there where many of them) I can not say that much. Just tried to exclude those answers which made no sense to me, where often the two remaining answers seemed to be equally “right”. Especially as a non-native speaker I found them to be daunting. In addition I had to blindly guess 5-8 questions in the last 3 Minutes before the exam ended.

In summary I felt the real exam to be significantly more difficult than all practice exams I’ve ever did, which leaves me with a feeling of not having scored enough for a pass. For now, I can’t do more than wait for my results.

Kind regards

I am feeling exactly the same as you. Those qualitative questions are so lengthy and very time-consuming for a non-native speaker like me :(.
 

goodbunny

New Member
Hello all,

attended the exam in Frankfurt on Saturday.

I scored 76.25 % in BT mock exam 2020 on my first attempt. Further I did the GARP Practice Exam 2020 and two Schweser 2019 Practice Exams, scoring 67.5 %, 62.5 % and 56.25 % (Schweser questions where poorly written in several cases), respectively, which leads to an average of 65,63 ±7.32 %. All practice exams where done with a mask and 4 hours time restriction (by the way for the real exam we did not get any GARP provided masks as stated on the GARP website. Used my own). Overall I had a good feeling prior to sitting for the exam (without being overconfident).

After exiting the exam room on Saturday I felt exhausted without being sure if I will make it. The questions where long and very tricky (only a few where straightforward). It was definitely a tough exam! I screwed up a couple of numerical problems but at least I am quite sure having more numericals correct than I had wrong (at least of those recalling hours after the exam). When it comes to the qualitative problems (and there where many of them) I can not say that much. Just tried to exclude those answers which made no sense to me, where often the two remaining answers seemed to be equally “right”. Especially as a non-native speaker I found them to be daunting. In addition I had to blindly guess 5-8 questions in the last 3 Minutes before the exam ended.

In summary I felt the real exam to be significantly more difficult than all practice exams I’ve ever did, which leaves me with a feeling of not having scored enough for a pass. For now, I can’t do more than wait for my results.

Kind regards
I think everyone felt this way to be honest, so don't feel too bad.

I found that time management was a real issue, especially since there was so much text to read through.

I am hoping the passing score is a lot lower. Seems like historical this is between 40-50?
 

lakhlu

New Member
was quite angry at Garp during the exam. There were definitely 3-5 questions that were super biased wherein 2 answers were correct (qualitative). Otherwise, yeah, much tougher than on any test mock exams, they raised the bar quite much with those Part 2 changes they made
 

sauce2k

New Member
Not sure if its just me, but for the wordy questions with mixed choices from different areas, i don’t think its necessary to go through the wordy intro at all, i went straight for the choices and imo, they were easily distinguishable.

For the toughness of the entire exam, it was tough enough...only 2-3 questions resembles 2020 practice paper questions.

For the first 30-40 questions, they were tricky enough imo, the later questions were better.

There were questions booklets with different colouring, not sure if they contain different sets of questions.

Was expecting some red herring, but imo there was way too much.
 

clement

New Member
Hi all,
Similar feeling for me, although I found that time was not an issue per se (I finished after 2h45min and had 1h15 to mull over the questions I was struggling with. Something that has been especially bugging me: two times, I thought the questions were easy, but the answer I derived was not in the menu of possible choices.

1) The value of equity with the Merton model: I knew the formula by heart (and it was correct). They gave us V=60 F=40 T=2 r= 3% N(d1)=0.95 and N(d2)=0.88. it led me to something like 23 but the choices were 21, 24, 30, 35 -- or something similar. Anyone with the same thing? They also specified that the market value of the debt was trading at 57% of face value. I found that it wasn't clear what d1 and d2 refered to to be honnest. (And I now have flashbacks where I fear that I misread the question: they did ask for the value of equity, didn't they? And not for the value of debt?)

2) Select an asset to complement a one-asset portflio so the risk budget remains under 19m (at 99%). Already 70m of asset A, needed to add 30m of asset B or C, they give you vol, returns, and correlation. I compute for B and C sigma as sqrt(0.7^2*sigma_a^2 + 0.3^3*sigma_b/c^2 + 2*corr*0.7*0.3*sigma_a*sigma_b/c), times 2.33 and here I can choose one answer as the total VaR of the portfolio as being 18.6m. BUT: I haven't subtracted the returns yet, so I weight the return, once for B and once for C (0.7*r_a + 0.3*r_b/c) but now there is no selection for my answer for either B or C, and the total VaR_portfolio that I get are around 8 or 9m when the choices are more around 17-21m (or so). Why wouldn't I have to take into account the returns!?

I got a bit annoyed that they asked the risk contribution for the UL -- it was the formula at the very very topc of my 7 pages of notes, but I couldn't remember it.

Also beating myself for two answers:
(1) somehow disregarding that Treasury was 1st line of defense (when I think the answer was right, and instead I chose something along the lines of "there are only three forms of netting form, bilateral, multilateral, CCP" which is probably wrong)
(2) choosing that there was a cap of 72.5% in the FRTB (the number rang a bell, so that's why I picked up -- turns out it was in reference to when using the SA , the output floor for RWA). Don't remember what the other possible answers were.

Does anyone know the answer regarding regulators and cyber security strategy? I remember choosing that most regulators require an info sec strategy, not necessarily a cyber one; I thought the other plausible one was that *all* regulators require that cyber be treated with 3 lines of defense. Would that be true?

Tough exam in any case. I already counted roughly 10 mistakes that I know of (there were 3 questions which I had absolutely no idea what they were about). I've been revising since January at the rate of 1h a day, so was a bit bummed out after the exam. In a way, it comforts me a bit to read that others found it similarly tough.
 

sauce2k

New Member
was quite angry at Garp during the exam. There were definitely 3-5 questions that were super biased wherein 2 answers were correct (qualitative). Otherwise, yeah, much tougher than on any test mock exams, they raised the bar quite much with those Part 2 changes they made
Agreed
 

clement

New Member
Not sure if its just me, but for the wordy questions with mixed choices from different areas, i don’t think its necessary to go through the wordy intro at all, i went straight for the choices and imo, they were easily distinguishable.

For the toughness of the entire exam, it was tough enough...only 2-3 questions resembles 2020 practice paper questions.

For the first 30-40 questions, they were tricky enough imo, the later questions were better.

There were questions booklets with different colouring, not sure if they contain different sets of questions.

Was expecting some red herring, but imo there was way too much.
definitely, the last 10 questions are so had a lot of blabla that didn't have so much relevancy to what was being asked in the end
 

randomname

New Member
Hi all,
Similar feeling for me, although I found that time was not an issue per se (I finished after 2h45min and had 1h15 to mull over the questions I was struggling with. Something that has been especially bugging me: two times, I thought the questions were easy, but the answer I derived was not in the menu of possible choices.

1) The value of equity with the Merton model: I knew the formula by heart (and it was correct). They gave us V=60 F=40 T=2 r= 3% N(d1)=0.95 and N(d2)=0.88. it led me to something like 23 but the choices were 21, 24, 30, 35 -- or something similar. Anyone with the same thing? They also specified that the market value of the debt was trading at 57% of face value. I found that it wasn't clear what d1 and d2 refered to to be honnest. (And I now have flashbacks where I fear that I misread the question: they did ask for the value of equity, didn't they? And not for the value of debt?)

2) Select an asset to complement a one-asset portflio so the risk budget remains under 19m (at 99%). Already 70m of asset A, needed to add 30m of asset B or C, they give you vol, returns, and correlation. I compute for B and C sigma as sqrt(0.7^2*sigma_a^2 + 0.3^3*sigma_b/c^2 + 2*corr*0.7*0.3*sigma_a*sigma_b/c), times 2.33 and here I can choose one answer as the total VaR of the portfolio as being 18.6m. BUT: I haven't subtracted the returns yet, so I weight the return, once for B and once for C (0.7*r_a + 0.3*r_b/c) but now there is no selection for my answer for either B or C, and the total VaR_portfolio that I get are around 8 or 9m when the choices are more around 17-21m (or so). Why wouldn't I have to take into account the returns!?

I got a bit annoyed that they asked the risk contribution for the UL -- it was the formula at the very very topc of my 7 pages of notes, but I couldn't remember it.

Also beating myself for two answers:
(1) somehow disregarding that Treasury was 1st line of defense (when I think the answer was right, and instead I chose something along the lines of "there are only three forms of netting form, bilateral, multilateral, CCP" which is probably wrong)
(2) choosing that there was a cap of 72.5% in the FRTB (the number rang a bell, so that's why I picked up -- turns out it was in reference to when using the SA , the output floor for RWA). Don't remember what the other possible answers were.

Does anyone know the answer regarding regulators and cyber security strategy? I remember choosing that most regulators require an info sec strategy, not necessarily a cyber one; I thought the other plausible one was that *all* regulators require that cyber be treated with 3 lines of defense. Would that be true?

Tough exam in any case. I already counted roughly 10 mistakes that I know of (there were 3 questions which I had absolutely no idea what they were about). I've been revising since January at the rate of 1h a day, so was a bit bummed out after the exam. In a way, it comforts me a bit to read that others found it similarly tough.
Had the same issue with the Merton model, i.e. the result I obtained based on the correct formula did not match one of the answers. So I ended up choosing 21mn (which would be the result when not discounting the debt), however that is likely wrong.
 
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sauce2k

New Member
Hi all,
Similar feeling for me, although I found that time was not an issue per se (I finished after 2h45min and had 1h15 to mull over the questions I was struggling with. Something that has been especially bugging me: two times, I thought the questions were easy, but the answer I derived was not in the menu of possible choices.

1) The value of equity with the Merton model: I knew the formula by heart (and it was correct). They gave us V=60 F=40 T=2 r= 3% N(d1)=0.95 and N(d2)=0.88. it led me to something like 23 but the choices were 21, 24, 30, 35 -- or something similar. Anyone with the same thing? They also specified that the market value of the debt was trading at 57% of face value. I found that it wasn't clear what d1 and d2 refered to to be honnest. (And I now have flashbacks where I fear that I misread the question: they did ask for the value of equity, didn't they? And not for the value of debt?)

2) Select an asset to complement a one-asset portflio so the risk budget remains under 19m (at 99%). Already 70m of asset A, needed to add 30m of asset B or C, they give you vol, returns, and correlation. I compute for B and C sigma as sqrt(0.7^2*sigma_a^2 + 0.3^3*sigma_b/c^2 + 2*corr*0.7*0.3*sigma_a*sigma_b/c), times 2.33 and here I can choose one answer as the total VaR of the portfolio as being 18.6m. BUT: I haven't subtracted the returns yet, so I weight the return, once for B and once for C (0.7*r_a + 0.3*r_b/c) but now there is no selection for my answer for either B or C, and the total VaR_portfolio that I get are around 8 or 9m when the choices are more around 17-21m (or so). Why wouldn't I have to take into account the returns!?

I got a bit annoyed that they asked the risk contribution for the UL -- it was the formula at the very very topc of my 7 pages of notes, but I couldn't remember it.

Also beating myself for two answers:
(1) somehow disregarding that Treasury was 1st line of defense (when I think the answer was right, and instead I chose something along the lines of "there are only three forms of netting form, bilateral, multilateral, CCP" which is probably wrong)
(2) choosing that there was a cap of 72.5% in the FRTB (the number rang a bell, so that's why I picked up -- turns out it was in reference to when using the SA , the output floor for RWA). Don't remember what the other possible answers were.

Does anyone know the answer regarding regulators and cyber security strategy? I remember choosing that most regulators require an info sec strategy, not necessarily a cyber one; I thought the other plausible one was that *all* regulators require that cyber be treated with 3 lines of defense. Would that be true?

Tough exam in any case. I already counted roughly 10 mistakes that I know of (there were 3 questions which I had absolutely no idea what they were about). I've been revising since January at the rate of 1h a day, so was a bit bummed out after the exam. In a way, it comforts me a bit to read that others found it similarly tough.
Hi clement,

For the Merton model question, I think it asked for equity value, so I went for the discounted F, coz it was Ke-rt*N(d2) in BSM.

Thanks.
 

sauce2k

New Member
Just to recall, there was one question on the Vasicek I could not get the exact figure per the choices, think the 3-months rate conversion plays a key role in this Q, otherwise it’s a simple Q. Anyone confident about this Q?

There was another Q on risk budgeting using VaR where returns and vols were given in a table format, but I dont think the returns were used...the question could have been more specific and ask for a relative VaR, but it didn’t. So I wasted some time on trying out whether its the z-value rounding problem or the absolute vs. Relative VaR issue. Got 9 or sth with drift, without drift is 19?
 

goodbunny

New Member
Had t

Had the same issue with the Merton model, I ended up choosing 21mn (which would be the result when not discounting the debt), however that is likely wrong.
Hi clement,

For the Merton model question, I think it asked for equity value, so I went for the discounted F, coz it was Ke-rt*N(d2) in BSM.

Thanks.
clement,

For the Merton model question, I think it asked for equity value, so I went for the discounted F, coz it was Ke-rt*N(d2) in BSM.

Thanks.
But equity value is Va (Asset value) - Xe-rt (debt value). We were supposed to use the market value of debt I assume.
 

clement

New Member
Hi clement,

For the Merton model question, I think it asked for equity value, so I went for the discounted F, coz it was Ke-rt*N(d2) in BSM.

Thanks.
Yes, I also went for that but the answers didn't match what I was obtaining: V*N(d1)-F*exp(-rT)*N(d2). I spent a full 30min trying different combinations but really couldn't figure it out
 

clement

New Member
Just to recall, there was one question on the Vasicek I could not get the exact figure per the choices, think the 3-months rate conversion plays a key role in this Q, otherwise it’s a simple Q. Anyone confident about this Q?

There was another Q on risk budgeting using VaR where returns and vols were given in a table format, but I dont think the returns were used...the question could have been more specific and ask for a relative VaR, but it didn’t. So I wasted some time on trying out whether its the z-value rounding problem or the absolute vs. Relative VaR issue. Got 9 or sth with drift, without drift is 19?
Yes, that's the second question I was referring to in my post; I can't get why the returns wouldn't be used in calculating the VaR.

Re the Vasicek: I remember getting an answer which matched one of the choices for once for that one though...
 

clement

New Member
Everything seem hazy after the exam...but
think Vasicek has something to do with the weighted long run rate and weighted short rate with reversion factor exponent
risk budgeting was probably asking for marginal var...
I don't think it asked for MVaR; the answers did state that the total portfolio VaR would be xyz
 

sauce2k

New Member
Everything seem hazy after the exam...but
think Vasicek has something to do with the weighted long run rate and weighted short rate with reversion factor exponent
risk budgeting was probably asking for marginal var...
Think it asked for VaRp? Sth like choosing which to combine with the existing will yield the lowest VaRp and the VaRp value?
 

goodbunny

New Member
Just to recall, there was one question on the Vasicek I could not get the exact figure per the choices, think the 3-months rate conversion plays a key role in this Q, otherwise it’s a simple Q. Anyone confident about this Q?

There was another Q on risk budgeting using VaR where returns and vols were given in a table format, but I dont think the returns were used...the question could have been more specific and ask for a relative VaR, but it didn’t. So I wasted some time on trying out whether its the z-value rounding problem or the absolute vs. Relative VaR issue. Got 9 or sth with drift, without drift is 19?
Do you happen to recall the factor values?
Think we just plug into r0+k(theta-r)DT+sigma*dw
I can't actually remember.
 
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