The FRM exam is a prestigious certification offered by the Global Association of Risk Professionals (GARP). The curriculum of this exam is designed assess the knowledge and skills necessary to manage risk in the rapidly evolving financial industry.
Passing the FRM Part 1 & 2 exams is a crucial step towards earning the certification and advancing your career in risk management.
In this blog, we will discuss the best study materials for the FRM exam. We will also cover the guidelines for making a study plan, and offer valuable tips and strategies to help you ace the FRM exam.
Understanding the FRM Exam
- FRM Part 1 -`The FRM Part 1 exam is a multiple-choice test that consists of 100 questions. Candidates are given 4 hours to complete the exam. This part covers key risk management concepts and their real world applications.
- FRM Part 2 – Questions in Part 2 are more advanced and focused on the practical application of risk management concepts. The exam consists of 80 multiple-choice questions, and candidates are given 4 hours to complete the test.
FRM Part 1 exam covers four main topics:
- Foundations of Risk Management: This section introduces the principles of risk management, governance, and risk measurement.
- Quantitative Analysis: This section focuses on the mathematical and statistical tools used in risk management.
- Financial Markets and Products:
This section delves into diverse financial instruments, including bonds, equities, options, and swaps, and their corresponding risks.
- Valuation and Risk Models: This section covers the valuation of financial instruments and the application of various risk models, such as credit risk models, operational risk models, and stress testing.
The FRM Part 2 Exam Covers 6 Main Topics:
- Market Risk Measurement and Management: This subject covers advanced techniques for measuring and managing market risk, including models for interest rate risk, equity risk, and foreign exchange risk.
- Credit Risk Measurement and Management: This subject explores credit risk measurement and management, including credit exposure calculations, credit default risk models, credit portfolio risk, and credit derivatives.
- Operational Risk and Resiliency: This subject focuses on the identification, measurement, and management of operational risk, covering topics such as operational risk frameworks, loss data modeling, key risk indicators (KRIs), and risk and control self-assessments (RCSAs).
- Liquidity and Treasury Risk Measurement and Management: This subject deals with liquidity risk measurement and management, including liquidity risk models, funding risk, and liquidity stress testing.
- Risk Management and Investment Management: This subject examines the integration of risk management principles into the investment management process.
- Current Issues in Financial Markets: This subject addresses recent developments and emerging trends in financial markets, including new regulations, financial innovations, and evolving risk management practices.
Scoring and passing criteria
The FRM exam does not have a predetermined passing score. Instead, the passing rate is determined by the performance of all candidates who take the exam.
Generally, the top 30-40% of candidates pass the exam, as per historical track records.
Official Study Material from GARP
- GARP books: GARP provides a set of official books that cover the entire FRM Part 1 & 2 syllabus. These books are written by experts in the field and are specifically tailored to the exam, which makes them very crucial for your preparation.
- GARP practice exams: GARP also offers practice exams that can help you familiarize yourself with the exam format and gauge your readiness. These practice exams are an essential tool for identifying areas where you need to improve and for building your test-taking skills.
Third-Party Study Material for FRM Exam
Comparison of Top third Party FRM Prep Providers
Given below is a table that lists the top third-party study material providers for the FRM Part 1 & 2 exam. This table also provides comparison of each provider’s offerings in terms of study notes, video lectures, question banks, mock exams & unique resources-
|Provider||Study Notes||Video Lectures||Question Bank||Unique Features|
|QuintEdge||Comprehensive, Easy to understand, Follows Official Curriculum intuitively||High-quality, clear, engaging, Comprehensive, In-depth Understanding||Equal to Exam Level Difficulty||Faculty Office-Hours, study planner, Video Solution bank, Discussion Forum|
|Schweser||Comprehensive, easy to understand, follows GARP syllabus||High-quality, clear, engaging||Lower than Exam Level Difficulty||Online forums, study planner, QuickSheet|
|Bionic Turtle||In-depth, detailed explanations, focus on practical applications||In-depth, thorough understanding||Higher than exam level Difficulty||Online Forum|
|Wiley||Comprehensive, clear explanations, follows GARP syllabus||Comprehensive, in-depth coverage||Higher than Exam Level||Study planner, formula sheets|
|AnalystPrep||Concise, easy to understand, straightforward approach||Clear, concise, easy to grasp||Equal Exam Level Difficulty||Performance tracking|
Factors to consider when choosing third-party study materials
When selecting third-party study materials, consider the following factors:
- Coverage of the syllabus: Ensure the study materials cover the entire FRM syllabus and are up to date with the latest exam requirements.
- Quality of content: Seek out resources that are well-crafted, straightforward to comprehend, and offer clear and accessible explanations of intricate subjects.
- Practice questions and mock exams: Choose materials that offer a sufficient number of practice questions and mock exams, as these will help you apply your knowledge and improve your test-taking skills.
- Price and value for money: Compare the prices of different study materials and consider their value for money. Remember, investing in high-quality materials can significantly increase your chances of passing the exam.
- Reviews and recommendations: Read reviews from other candidates who have used the study materials to determine their effectiveness and suitability for your needs.
Additional Study Resources
- Online forums and communities: Online forums, such as Reddit and LinkedIn groups, can be a great place to connect with other FRM candidates, share study tips, and ask questions.
- Mobile apps for on-the-go learning: Several mobile apps, such as the Schweser FRM app and Wiley FRM app, offer study materials, practice questions, and quizzes to help you study on-the-go.
- Podcasts and YouTube channels: Podcasts, like the Financial Analyst Warrior Podcast, and YouTube channels, such as Bionic Turtle’s channel, can provide supplementary information and insights into risk management topics.
- Study groups and networking: Joining a local study group or creating one with fellow candidates can be an effective way to stay motivated, share resources, and learn from others.
Creating a Study Plan for FRM Exam
- Estimating the time required for preparation: Most candidates require 300-400 hours of study to adequately prepare for the FRM Part 1 & 2exam each. Consider your current knowledge and availability to estimate the time needed for preparation.
- Setting up a study schedule: Create a realistic and flexible study schedule that allocates time for each topic, practice questions, and mock exams. Make sure to set aside time for reviewing difficult concepts and for regular breaks to avoid burnout.
- Balancing work and study: If you’re working full-time, consider allocating study time during weekends, early mornings, or evenings. Be prepared to make sacrifices and find ways to stay focused and motivated.
- Allocating time for each topic: Distribute your study time based on the weightage of each topic in the exam and your current level of understanding. Focus more on areas where you need improvement and ensure you have a strong foundation in all topics.
- Making time for practice exams and review: Schedule regular practice exams to gauge your progress and identify areas where you need further improvement. Allocate time to review your mistakes and learn from them.
Tips and Strategies for Acing FRM Exam
- Focus on understanding concepts, not memorization: The FRM Part 1 exam tests your understanding of risk management concepts and their practical application. Strive to understand the underlying principles and develop an intuitive grasp of the material.
- Prioritize key topics and high-weightage areas: Focus on mastering the most critical topics and those with higher weightage in the exam, such as Foundations of Risk Management and Quantitative Analysis.
- Develop problem-solving skills: The FRM exam includes complex, real-world problems. Practice solving a variety of questions and develop a systematic approach to tackling them.
- Practice under exam-like conditions: Simulate the exam environment by timing yourself and practicing with mock exams. This will help you build your test-taking skills and improve your time management.
- Review mistakes and learn from them: After each practice exam, review your mistakes and identify patterns. Use this feedback to refine your study plan and improve your understanding of the material.
- Stay updated on industry news and changes in the field: Regularly read industry publications and follow relevant news sources to stay informed about the latest developments in risk management.
Selecting the right study materials and developing a solid study plan are crucial to success in the FRM exam. By taking charge of your preparation, staying focused, and using the resources and strategies outlined in this guide, you can maximize your chances of passing the exam and advancing your career in risk management. We wish you the best of luck in your FRM Part 1 exam journey!
Frequently Asked Question
Consider factors such as syllabus coverage, quality of content, practice questions and mock exams, price and value for money, and reviews when selecting study materials.
The full fledged FRM Prep Course of a top prep provider costs $400 on an average.