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# Problems in GARP's 2020 FRM material

#### vishno

##### New Member
Subscriber
FRM 1, Foundations, Chapter 2, Question No. 2.14: MGRM was exposed to a shift in the price curve from backwardation to contango, which meant that the program generated huge margin calls that became a severe and unexpected cash drain.
A. True
B. False

As per Section 2.7 (What can go wrong in Corporate Hedging?), it should be 'True'. The 'Answers' section, however, states: 'False because the curve moved from backwardation to contango'.

#### David Harper CFA FRM

##### David Harper CFA FRM
Staff member
Subscriber
@vishno We've already captured FRM-1 (i.e., foundtations) 2.14 here at https://www.bionicturtle.com/forum/threads/problems-in-garps-2020-frm-material.23011/post-81062 but it's deeper than true/false actually
Thank you @GarryB good catch. This Q&A apparently wants to be "True" but there is an important caveat: it is a lazy, imprecise question. The MGRM case has been assigned since the start of the FRM so it has been extensively covered by several authors. Let us make a note of something: the shift in the forward curve (aka, futures price curve ... it is lazy to call it a "price curve") from contango to backwardation does not itself generate huge margin calls.