Pristine www.edupristine.com
FRM and PRM Exam : Analysis
2011
www.edupristine.com
Agenda
• About Pristine
• FRM and PRM Exams
• Resources
• Overall Exam Analysis
• Analysis of Quantita...
www.edupristine.com
Pristine
Finance trainings for individuals/corporate/colleges
Trainings for
International
Certificatio...
www.edupristine.com
Pristine Offerings
*All cities include Mumbai, Delhi, Kolkata, Chennai, Bangalore, Pune and Hyderabad ...
www.edupristine.com
GARP (2007-11)
Authorized Training provider -FRM
Largest player in India in the area of risk
managemen...
www.edupristine.com
HSBC (2008)
Risk Management and Quant.
Analysis
New joinees in HSBC had a gap in
knowledge of Risk Man...
www.edupristine.com
IIM Calcutta (2010-11)
Financial Modeling in Excel
Students about to go for
internships and join jobs ...
www.edupristine.com
Largest Authorized
FRM Course Provider in India
Trains 600+ FRM Aspirants each year
8Karuna - +91 8080...
www.edupristine.com
About Pristine
• Founded by professionals and alumnus of Standard Chartered, Goldman Sachs, Reliance P...
www.edupristine.com
Agenda
• About Pristine
• FRM and PRM Exams
• Resources
• Overall Exam Analysis
• Analysis of Quantita...
www.edupristine.com
CFA – Eligibility
• Minimum Eligibility
– FRM Part I exam : Even a undergraduate can appear for FRM Pa...
www.edupristine.com
FRM : Exam pattern
– Each Part is 4 hours exam ( Two sessions of 2 hrs each)
• 100 multiple choice que...
www.edupristine.com
FRM Exam Dates, Centers & Fees
• Exam Dates
– FRM Lev I & Lev II exam : 3rd Saturday of May & November...
www.edupristine.com
FRM Exam Curriculum
Subjects Weightage
Quantitative Analysis 20%
Financial Market & Products 30%
Valua...
www.edupristine.com
PRM Exam
Exam I Finance Theory, Financial Instruments and Markets (120 minutes)
Exam II Mathematical F...
www.edupristine.com
FRM vs PRM
FRM PRM
Conducted by GARP (www.garp.com) PRMIA (www.prmia.org)
Fee (Indicative and Overall)...
www.edupristine.com
Agenda
• About Pristine
• FRM and PRM Exams
• Resources
• Overall Exam Analysis
• Analysis of Quantita...
www.edupristine.com
FRM Exam – Resources
• Core Reading : Approx 4000 Pages
• FRM Phillip Jorian Hand Book : 800 Pages
• O...
www.edupristine.com
Agenda
• About Pristine
• FRM and PRM Exams
• Resources
• Overall Exam Analysis
• Analysis of Quantita...
www.edupristine.com
FRM Exam : Question Pattern Analysis
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
C
redit
R
isk
Financi...
www.edupristine.com
FRM Exam : Question Pattern Analysis
• Most common question
– Calculating the portfolio VaR requires t...
www.edupristine.com
Agenda
• About Pristine
• FRM and PRM Exams
• Resources
• Overall Exam Analysis
• Analysis of Quantita...
www.edupristine.com
FRM Exam Question Pattern Analysis: Quant
• If we broadly divide the syllabus, it would consist of:
– ...
www.edupristine.com
FRM Exam Question Pattern Analysis: Quant
• If we were to see the pattern for FRM Exam 2009, we find t...
www.edupristine.com
FRM Exam Question Pattern Analysis: Quant
• The other kind of question can be based upon finding the s...
www.edupristine.com
Agenda
• About Pristine
• FRM and PRM Exams
• Resources
• Overall Exam Analysis
• Analysis of Quantita...
www.edupristine.com
FRM Exam Question Pattern Analysis: Market Products
• The broad classification of topics covered in Fi...
www.edupristine.com
FRM Exam Question Pattern Analysis: Market Products
• If we look closely at the last 3-4 years Sample ...
www.edupristine.com
FRM Exam Question Pattern Analysis: Market Products
• If we look closely at the last 2-3 years sample ...
www.edupristine.com
FRM Exam Question Pattern Analysis: Market Products
• FRM 2009 sample exam has a lot of questions on t...
www.edupristine.com
Agenda
• About Pristine
• FRM and PRM Exams
• Resources
• Overall Exam Analysis
• Analysis of Quantita...
www.edupristine.com
FAQs
• Will there be separate Study Guides for the FRM Exam Full and FRM Exam Part I and FRM Exam
Part...
www.edupristine.com
FAQs
• What topics will be covered in the FRM Exam Part I and the FRM Exam Part II?
– The FRM Exam Par...
www.edupristine.com
FAQs
• Are there review courses I can take or study groups I can join?
• GARP does not offer FRM prepa...
www.edupristine.com
Agenda
• About Pristine
• FRM and PRM Exams
• Resources
• Overall Exam Analysis
• Analysis of Quantita...
www.edupristine.com
Offering for FRM Part I Preparation
• FRM Part I Preparation
– FRM Certified Faculty from IIT/IIM’s wi...
www.edupristine.com
Quantitative Analysis
Random
variables
Measures of Central
tendency
Prob. & Prob.
distribution
Hypothe...
www.edupristine.com38Karuna - +91 8080 00 5533
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Online platform for enhanced learning experience
• All the courses materials are uploaded on website a...
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Trained professionals from various institutions
40Karuna - +91 8080 00 5533
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Content management introduces discipline in learning
Neev provides solution for content management and...
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Practice Questions
Neev provides solution for instantaneous feedback and collective learning opportuni...
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Pristine’s teaching methodology and faculty has got rave
reviews from the students of previous batches...
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Agenda
• About Pristine
• FRM and PRM Exams
• Resources
• Overall Exam Analysis
• Analysis of Quantita...
Pristine www.edupristine.com
Questions
For Registration or Query
Karuna (for Mumbai) : 8080005533
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About FRM

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Information about the Financial Risk Manager certification by GARP, and its career prospects in India.For more information on this video, and to sign-up for our 10-day Free CFA Course click here:-http://www.edupristine.com/courses/cfa-chartered-financial-analyst/cfa-level-i-trainings/
To know more about these trainings, do contact us at -M: +91 80800 05533

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About FRM

  1. 1. Pristine www.edupristine.com FRM and PRM Exam : Analysis 2011
  2. 2. www.edupristine.com Agenda • About Pristine • FRM and PRM Exams • Resources • Overall Exam Analysis • Analysis of Quantitative Analysis • Analysis of Market Products • FAQs • Contact Us • Pristine FRM Offering 2Karuna - +91 8080 00 5533
  3. 3. www.edupristine.com Pristine Finance trainings for individuals/corporate/colleges Trainings for International Certifications Corporate Trainings Pristine Certifications - Authorized training providers for prestigious international certifications like CFA*, FRM, PRM, CFP* etc. - Pan India class-room trainings and web-based live online trainings for international students - Advanced training in financial modeling, valuation, risk, etc. to large corporate clients like HSBC, CSFB, IDBI, Mizuho Bank etc. - Own certification programs in financial modeling, finance training for corporate lawyers, risk management etc. - Certification programs in Equity Research, Derivatives being launched 3Karuna - +91 8080 00 5533 About Pristine
  4. 4. www.edupristine.com Pristine Offerings *All cities include Mumbai, Delhi, Kolkata, Chennai, Bangalore, Pune and Hyderabad ; Course Classroom Trainings Online Trainings Content Crash Course/ Mock Test Hours of training Accreditation Price CFA Level I All* + Singapore Yes Original Yes 100 CFA Institute USD 595; INR 17,950 CFA Level II Mumbai, Delhi Yes Original Yes 100 CFA Institute USD 595; INR 16,950 FRM Level I All + Singapore Yes Original Yes 75 GARP USD 495; INR 12,950 FRM Level II Mumbai Yes Original Yes 60 GARP USD 495, INR 10,000 PRM All + Singapore Yes Original Yes 135 PRMIA USD 795, INR 20,000 APRM Corporate Yes Original Yes 80 PRMIA INR 10,000 Financial Modeling Mumbai, Delhi, Bangalore, Pune, Hyd, Chennai Yes Original NA 50 - INR 10,000 Finance for Lawyers Mumbai No Original NA 50 - INR 45,000 CFP Mumbai, Delhi Yes Original NA 120 Under Process INR 20,000 4Karuna - +91 8080 00 5533
  5. 5. www.edupristine.com GARP (2007-11) Authorized Training provider -FRM Largest player in India in the area of risk management training. Trained 1000+ students in risk management PRMIA (2009-11) Authorized Training provider – PRM/ APRM Sole authorized training for PRM Training in India. Largest player in India in the area of risk management training. Trained 1000+ students in risk management CFA Institute (2010-11) Authorized Training provider – CFA Pristine is now the authorized training provider for CFA Exam trainings . Pristine is largest training provider for CFA in India with presence across seven major cities. FPSB India (2010-11) Authorized Training provider -CFP An authorized Education Provider for Chartered Financial Planner Charter. 5Karuna - +91 8080 00 5533 Key Authorizations…
  6. 6. www.edupristine.com HSBC (2008) Risk Management and Quant. Analysis New joinees in HSBC had a gap in knowledge of Risk Management and quantitative skills. Conducted trainings (On campus) to bridge the gap *Indicative List Mizuho (2010) Financial Modeling in Excel Bankers were using excel models that they could not understand. Conducted financial modeling in Excel trainings to bridge the gap Bank Of America Continuum Solutions (2010) Finance for Finance Associates were trained on valuation and mergers and acquisitions J. P. Morgan (2010) Financial Modeling in Excel The Real Assets Group were trained in Excel for infrastructure and real- estate modeling Franklin Templeton CFA (2010) Students were facing a gap in the overall understanding of finance topics like corporate finance, FSA and valuation. Provided training for over 100 hours to bridge the gap Credit-Suisse India (2009) Risk Management and Quant. Analysis IT Professionals of Credit- Suisse India were trained on risk management. Ernst & Young (2010) Real Estate Modeling Senior Associates were trained on building valuation models for real estate ING Vyasa (2010) Infrastructure & Project Finance Bankers were trained on making integrated models for project finance and infrastructure. 6Karuna - +91 8080 00 5533 Key Associations*
  7. 7. www.edupristine.com IIM Calcutta (2010-11) Financial Modeling in Excel Students about to go for internships and join jobs found a gap in their grasp of knowledge of excel for financial modeling. Conducted training for 75+ students with an average rating of 4.5+ BITS Pilani (2009) Workshops on Basics of Finance Most of the students desire a career in finance. Conducted training for 350+ students with an average rating of 4.5+ IIT Delhi (2009) Corporate finance Students get placed in finance companies (UBS, GS, MS, etc) with no understanding of the subject/ Job Profile. Conducted workshop to bridge the gap NUS Business School (2011) Financial Modeling in Excel Second year MBA students were given a full 2-day workshop on creating financial models. They learnt how to create integrated models of valuation. NISM (2008-11) Derivatives in Hedging (2008) Financial Modeling (2011) Corporate in Ludhiana incurred huge losses because of derivative trades (for hedging). Conducted trainings for directors and CFOs for better understanding of derivative products FMS Delhi (2010-11) Financial Modeling in Excel Final Year MBA students of Faculty of Management Studies, Delhi University were trained in financial modeling so as to prepare them better for a job in finance. IEMR Delhi (2010-11) Financial Modeling in Excel Final Year MBA students of IEMR went through extensive financial modeling workshop to acquire skills of financial modeling. SIMSREE (2010) Final Year MBA students of Sydenham MBA, Mumbai were trained in financial modeling so as to prepare them better for a job in finance. 7Karuna - +91 8080 00 5533 …Key Associations
  8. 8. www.edupristine.com Largest Authorized FRM Course Provider in India Trains 600+ FRM Aspirants each year 8Karuna - +91 8080 00 5533 Most Importantly
  9. 9. www.edupristine.com About Pristine • Founded by professionals and alumnus of Standard Chartered, Goldman Sachs, Reliance Private Equity, SBI, Accenture, IBM and CRISIL, IIM, IIT and SIBM. • Last Year Results: Have delivered trainings to more than 4,500+ candidates in last four years with a success rate of 65% to 85% for various batches for CFA/ PRM/FRM exams. • Training centers: in Delhi, Mumbai, Bangalore, Pune, Hyderabad, Chennai, Singapore & Online. • Faculty : FRM/PRM Certified or working professional with significant experience in Finance industry with education background of IIT/IIMs. • Provided FRM/PRM Online trainings to 350+ professionals from US, Europe, Middle East, Asia Pacific, Africa and Australia. 9Karuna - +91 8080 00 5533
  10. 10. www.edupristine.com Agenda • About Pristine • FRM and PRM Exams • Resources • Overall Exam Analysis • Analysis of Quantitative Analysis • Analysis of Market Products • FAQs • Contact Us • Pristine FRM Offering 10Karuna - +91 8080 00 5533
  11. 11. www.edupristine.com CFA – Eligibility • Minimum Eligibility – FRM Part I exam : Even a undergraduate can appear for FRM Part I exam. – FRM Part II exam : you should have cleared FRM Part I exam. • FRM Certificate Requirements – In order to be certified as a Financial Risk Manager (FRM®) and be able to use the FRM acronym after your name, the following is required: • A passing score in the FRM Part I and Part II Exams • Active Fellow membership in the Global Association of Risk Professionals • A minimum of two years experience in the area of financial risk management or another related field including, but not limited to, trading, portfolio management, academic or industry research, economics, auditing, risk consulting, and/or risk technology • About the Exam – Administered by GARP Institute, USA – Minimum time to pass the two exams: 6 months – Average time: 1 year • Benefits of FRM® designation – Lucrative career options in Risk Management, Trading, Structuring, Modeling, etc. FRM holders have positions such as Chief Risk Officer, Senior Risk Analyst, Head of Operational Risk, and Director, Investment Risk Management, to name a few. – Strong value addition to your skills, credentials and resume – Complete coverage of risk management concepts 11Karuna - +91 8080 00 5533
  12. 12. www.edupristine.com FRM : Exam pattern – Each Part is 4 hours exam ( Two sessions of 2 hrs each) • 100 multiple choice question exam for both Part I • 80 multiple choice questions for Part II • Necessary to Pass Part I before evaluation of Part II • Both the parts are held in May and November . • Part I topics , test weights and question allocation is as follows: – Foundations of Risk Management 20% 20 questions – Quantitative Analysis 20% 20 questions – Financial Markets and Products 30% 30 questions – Valuation and Risk Models 30% 30 questions The exam is a percentile based exam and there is a sectional cut-off for all the subjects, thus it's necessary to pass in all the subjects separately and clear the cutoff overall as well. 12Karuna - +91 8080 00 5533
  13. 13. www.edupristine.com FRM Exam Dates, Centers & Fees • Exam Dates – FRM Lev I & Lev II exam : 3rd Saturday of May & November month every year. • Exam Centers – Delhi, Mumbai, Chennai, Bangalore , Hyderabad, Calicut & Kolkata. • Fees Part I – For November Exam • Early Registration Fees : Dec. 1, 2010 - July 31, 2011 : $650 • Standard Registration Fees : Aug. 1 - Aug. 31, 2011 : $775 • Late Registration Fees: Sept. 1 - Oct. 15, 2011: $950 Part II –For November Exam • Early Registration Fees : Dec. 1, 2010 - July 31, 2011 : $350 • Standard Registration Fees : Aug. 1 - Aug. 31, 2011 : $475 • Late Registration Fees: Sept. 1 - Oct. 15, 2011: $650 13Karuna - +91 8080 00 5533
  14. 14. www.edupristine.com FRM Exam Curriculum Subjects Weightage Quantitative Analysis 20% Financial Market & Products 30% Valuation & Risk Models 30% Portfolio Theory & Performance measurement 20% Market Risk Measurement & Management 25% Credit Risk Measurement & Management 25% Current Issues in financial markets 10% Operational & Integrated risk Management 25% Risk Management & Investment management 15% Part I Part II 14Karuna - +91 8080 00 5533
  15. 15. www.edupristine.com PRM Exam Exam I Finance Theory, Financial Instruments and Markets (120 minutes) Exam II Mathematical Foundations of Risk Measurement (120 minutes) Exam III Risk Management Practices (90 minutes) Exam IV Case Studies, PRMIA Standards of Best Practice, Conduct and Ethics, Bylaws (60 minutes) • The exams are computer-based and the questions are all multiple choice. • Extremely Flexible - Can take PRM exams any business day of the year and in any order • Passing marks 60% for each exam Any one Exam USD 195 Full PRM Exam USD 500 Karuna - +91 8080 00 5533 15
  16. 16. www.edupristine.com FRM vs PRM FRM PRM Conducted by GARP (www.garp.com) PRMIA (www.prmia.org) Fee (Indicative and Overall) $1000 - 1350 $500-800 Pass rate ~60% ~50% Incepted since 1997 2002 Parts/ Parts 2 4 Exam Dates May/ Nov Any day Flexibility in giving Exam Either both in the same month or different months Either all modules on same day or on different days Scheduling of Parts/ modules Part I has to be cleared before attempting the Part II Any order Course Structure 65% same as PRM 65% same as FRM Kind of Questions Asked Case based long questions, requiring calculations Conceptual questions Pristine Official Course Provider-ship Yes Yes Karuna - +91 8080 00 5533 16
  17. 17. www.edupristine.com Agenda • About Pristine • FRM and PRM Exams • Resources • Overall Exam Analysis • Analysis of Quantitative Analysis • Analysis of Market Products • FAQs • Contact Us • Pristine FRM Offering 17Karuna - +91 8080 00 5533
  18. 18. www.edupristine.com FRM Exam – Resources • Core Reading : Approx 4000 Pages • FRM Phillip Jorian Hand Book : 800 Pages • Options Futures and Other Derivatives : 700 Pages • Must haves – GARP AIMS – FRM Practice Papers – Last year exam papers Focused Study is the order of the Day 18Karuna - +91 8080 00 5533
  19. 19. www.edupristine.com Agenda • About Pristine • FRM and PRM Exams • Resources • Overall Exam Analysis • Analysis of Quantitative Analysis • Analysis of Market Products • FAQs • Contact Us • Pristine FRM Offering 19Karuna - +91 8080 00 5533
  20. 20. www.edupristine.com FRM Exam : Question Pattern Analysis 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% C redit R isk FinancialM arkets & Products Foundations ofR isk M anagem ent M arket Risk O perational& Integrated R isk Q uantitative Analysis R isk & Investm ent M anagem ent V aluation and Risk M odels Not Formula Based Formula Based 50% of the questions are purely formula based questions 20Karuna - +91 8080 00 5533
  21. 21. www.edupristine.com FRM Exam : Question Pattern Analysis • Most common question – Calculating the portfolio VaR requires the calculation of portfolio volatility, for which we have the simple formula: VaR(Portfolio)= wa^2*σa^2 + wb^2*σb^2 + 2*wa*wb*σa*σb*Corelation(a,b) • Similarly another common formula is calculating the annual VaR from daily VaR (or changing the time duration of VaR) or calculating the significance intervals. These again use simple formulas: VaR (for time period T) = VaR(Daily) * Sqrt(T) • VaR (Significance Part alpha) = Z (Alpha) * Sigma • Similarly Questions on Quantitative Analysis, which are formula based, are based on EWMA, GARCH formulas, which are quite simple to calculate, if you know the formula and can apply it in the question. • Typical formulas would be: Return = ln(P(t)/P(t-1)) (Sigma(n))^2 = lambda * (Sigma(n-1))^2 + (1 – lambda) * U(n-1)^2 • Similarly the formula based questions from the rest of the parts are not very difficult. If you are able to remember them and apply them in the FRM Exam, rest assured, your chances of success would be very high. 21Karuna - +91 8080 00 5533
  22. 22. www.edupristine.com Agenda • About Pristine • FRM and PRM Exams • Resources • Overall Exam Analysis • Analysis of Quantitative Analysis • Analysis of Market Products • FAQs • Contact Us • Pristine FRM Offering 22Karuna - +91 8080 00 5533
  23. 23. www.edupristine.com FRM Exam Question Pattern Analysis: Quant • If we broadly divide the syllabus, it would consist of: – Probability (Including Counting Principles and Joint Prob. Etc.) – Probability Distributions – Moments (Mean, Variance, Skewness, Kurtosis) – Sampling Theorem – Hypothesis Testing – Correlation and Regression (And its Hypothesis testing) – Volatility (Variance as a random variable) – Monte Carlo Simulation If you take a look at it, the syllabus is HUGE! 23Karuna - +91 8080 00 5533
  24. 24. www.edupristine.com FRM Exam Question Pattern Analysis: Quant • If we were to see the pattern for FRM Exam 2009, we find that more than 50% of the syllabus is covered by non-quant and stats topics. These are essentially Estimating Volatility and Monte Carlo Simulations. I will take them one by one: • Estimating Volatility: Return = ln(P(t)/P(t-1)) • EWMA: (Sigma(n))^2 = lambda * (Sigma(n-1))^2 + (1 – lambda) * U(n-1)^2 • GARCH: (Sigma(n))^2 = alpha * V(L) + Beta* (Sigma(n-1))^2 + Gamma * U(n-1)^2 Where, alpha + beta + gamma = 1 Another variant, alpha * V(L) = omega • Monte Carlo is again simple! There is hardly any scope of a numerical question from simulation • Correlation Regression: Again here, one of the easiest questions would be to find the %age variance explained by your regression line. This is simple R^2, and the easiest thing to calculate: – SST = SSR + SSE – R^2 = SSR/SST – SEE = (SSE/(n-2) )^1/2 24Karuna - +91 8080 00 5533
  25. 25. www.edupristine.com FRM Exam Question Pattern Analysis: Quant • The other kind of question can be based upon finding the significance of regression parameters. Again this is simple – Look at the p-value in the table given, and find the parameters that are significant. This is ONE question, you should not miss!! • Portfolio Variance: Again questions (Usually multiple) from this concept have been coming in the examination for the last so many years. Again something that you should not miss!! VaR(Portfolio)= wa^2*σa^2 + wb^2*σb^2 + 2*wa*wb*σa*σb*Corelation(a,b) • Probability Distributions: Usually there is either a question on Normal Distribution, where you have to identify the rePartant area and find the value or you are given a binomial distribution, and you have to find the chances of none-of the bonds defaulting!! If you have practiced well, you can get these questions right!! 25Karuna - +91 8080 00 5533
  26. 26. www.edupristine.com Agenda • About Pristine • FRM and PRM Exams • Resources • Overall Exam Analysis • Analysis of Quantitative Analysis • Analysis of Market Products • FAQs • Contact Us • Pristine FRM Offering 26Karuna - +91 8080 00 5533
  27. 27. www.edupristine.com FRM Exam Question Pattern Analysis: Market Products • The broad classification of topics covered in Financial Markets and Products is: – Financial Markets (Primarily defining the role of various players) – Futures and forwards (Definitions, Valuation and Hedging) – Interest Rate and Currency (Some part is included here, – Fixed Income Instruments (Again part is covered in Valuation and Risk Models) – Swaps – Options (Again trading strategy is included here, some part is in Valuation and Risk Models) – Commodities If you take a look at it, the syllabus is HUGE! 27Karuna - +91 8080 00 5533
  28. 28. www.edupristine.com FRM Exam Question Pattern Analysis: Market Products • If we look closely at the last 3-4 years Sample papers, there are practically 2-3 questions from each of the topics! So it is difficult to single out any topic, which is important!! Anyways.. lets analyze it closely and give it a shot • By default, remember to use continuous compounding, unless otherwise mentioned!! For example, if you want to calculate returns, then use – R = Ln(P(t)/P(t-1)) • If it is expressly mentioned that you have to use discrete compounding, then only use: – R = {P(t) – P(t-1)}/P(t-1) • Similarly to value futures/ other instruments, use: – F(0,T) = S(0)*e^(rT) + C • There are normally atleast two questions on converting rates based on different compounding frequencies. It is one of the low hanging fruits as far as this section is concerned. • Please learn the usage of the calculator. You should be a master in usage of calculator, to make sure that you crack the exam. 28Karuna - +91 8080 00 5533
  29. 29. www.edupristine.com FRM Exam Question Pattern Analysis: Market Products • If we look closely at the last 2-3 years sample papers, the question that is always there relates to finding duration and modified duration. Normally not a tough question and just a couple of formulae to remember: 29Karuna - +91 8080 00 5533
  30. 30. www.edupristine.com FRM Exam Question Pattern Analysis: Market Products • FRM 2009 sample exam has a lot of questions on trading strategies. • Can just draw curves of payoffs, and remember the various payoffs like – Straddle, – Strangle, – Butterfly spreads, etc. • you would have done 5 questions correct! • Remember the Payoffs of – Long Call, – Short Call, – Long Put, – Short Put, – Long Spot, – Short Spot and similarly for futures. • Apart from the above topics, there have been questions on Greeks. • Delta Hedging of portfolio has been one of the favorites of the examiners because of its simplicity of calculation and the concept checks on the understanding of the examinee about various aspects of Options Pricing. For delta hedging, Number of shares = (Number of calls) x (New delta – Old delta) • Apart from this there is generally a question on relationship between delta of options and Black- Scholes model. 30Karuna - +91 8080 00 5533
  31. 31. www.edupristine.com Agenda • About Pristine • FRM and PRM Exams • Resources • Overall Exam Analysis • Analysis of Quantitative Analysis • Analysis of Market Products • FAQs • Contact Us • Pristine FRM Offering 31Karuna - +91 8080 00 5533
  32. 32. www.edupristine.com FAQs • Will there be separate Study Guides for the FRM Exam Full and FRM Exam Part I and FRM Exam Part II? No, there will only be one Study Guide which will include the syllabus outline and recommended reading materials for all FRM Exam formats (Full, Part I and Part II). • Will there be separate Course Packs for the FRM Exam Full, FRM Exam Part I and FRM Exam Part II? Yes. The Course Packs will be customized according to the FRM Exam format and be made available for purchase either in physical format or through the GARP Digital Library. • How many hours of study are required to prepare for the FRM exams? Approximately 150 to 200 hours for each Part of the exam. Since the last FRM Exam Full covers both Parts, approximately 300 to 400 hours of preparation would be required. • Is there any change to the format of the FRM Exam Full that would make it different from past FRM Exams? No, the FRM Exam Full will be offered in exactly the same way as past FRM exams. 32Karuna - +91 8080 00 5533
  33. 33. www.edupristine.com FAQs • What topics will be covered in the FRM Exam Part I and the FRM Exam Part II? – The FRM Exam Part I will cover the following topics: – Foundations of Risk Management – Quantitative Analysis – Financial Markets and Products – Risk Modeling • The FRM Exam Part II will cover the following topics: – Market risk measurement and management – Credit risk measurement and management – Operational and integrated risk measurement and management – Risk management and investment management – Current issues in financial markets • How many questions will there be on FRM Exam Part I and FRM Exam Part II? • FRM Exam Part I will have 100 multiple-choice questions. FRM Exam Part II will have 80 multiple- choice questions. The exact number of questions is subject to minimal change. • How long are the test sessions for FRM Exam Part I and FRM Exam Part II? • Both Parts will be 4 hours in length and broken down as follows: 2 hours for the morning session and 2 hours for the afternoon session with a 90 minute break in between. 33Karuna - +91 8080 00 5533
  34. 34. www.edupristine.com FAQs • Are there review courses I can take or study groups I can join? • GARP does not offer FRM preparation courses as the Association considers this to be a conflict of interest. GARP also does not endorse any FRM review course or FRM course provider. However, as a service to our FRM candidates GARP does provide a listing of FRM course providers on its website. These Course Providers have asked to have their information posted for your review and have not been preselected by GARP. • GARP also facilitates the finding and development of local FRM study groups via its website. Click here to see and post information about local study groups. 34Karuna - +91 8080 00 5533
  35. 35. www.edupristine.com Agenda • About Pristine • FRM and PRM Exams • Resources • Overall Exam Analysis • Analysis of Quantitative Analysis • Analysis of Market Products • FAQs • Contact Us • Pristine FRM Offering 35Karuna - +91 8080 00 5533
  36. 36. www.edupristine.com Offering for FRM Part I Preparation • FRM Part I Preparation – FRM Certified Faculty from IIT/IIM’s with significant experience – Training Offering • 10 days of Comprehensive Classroom Trainings for all the subjects. • 3 days revision classes FRM Practice papers (2006, 2007, 2008, 2009 and 2010) will be discussed and the important concepts of all the subjects will be revised again • 2 days - Mock Tests specially designed by our trainers based on AIMS 2010, to evaluate your relative performance vis-à-vis other candidates • 20 hrs of Online Tests ( topic wise) - 1500 + questions • Free online classes for students who register for classroom trainings – Material • Free Pristine FRM Handbook and Visulized FRM Charts to all the FRM Training Participants • Online access to all the presentations and practice tests – Training timings: Saturday 2pm to 7.30pm ; Sunday 10am to 3.30pm – Training Fees: Rs 12,950 per participant • Visualize FRM – Comprehensive Charts covering major concepts, formulas and questions – Rs. 500* + Shipping Charges • Pristine FRM Exam Instructor Notes – Summarized handbook (~300 pages), covering all the learning objectives given by GARP – Rs. 500 + courier charges 36Karuna - +91 8080 00 5533
  37. 37. www.edupristine.com Quantitative Analysis Random variables Measures of Central tendency Prob. & Prob. distribution Hypothesis Testing Correlation & Regression Mean: ∑xi/n B Mode:-Value that occurs more frequently Median:-Midpoint of data arranged in ascending order A C Q. 25 observation are taken from a sample of unknown variance. Sample mean of 70 and σ = 60. You wish to conduct a two - tailed test of null hypothesis that the mean is equal to 50. What is most appropriate test statistic? Ans. Standard Error of mean (σx) = σ/ √(n) = 60/sqrt(25) = 12 Degrees of freedom = 24 Use T statistic = (x - μ)/ σx = (70 - 50)/12 = 1.67 Binomial Random Variable E(X)=n*p Var(X)=n*p*(1-p)=n*p*q Standardized RV is normalized mean = 0, σ = 1. Z-score: # of σ a given observation is from population mean. Z=(x-µ)/σ Q. At a particular time, the market value of assets of the firm is $100 Mn and the market value of debt is $80 Mn. The standard deviation of assets is $ 10 Mn. What is the distance to default? Ans. z = (A-K)/ σA = (100-80)/10 = 2 Standard Error (SE) SE (σx) of the sample mean is σ of the dist. of sample means •Known pop. Var. σx= σ/ √(n) •Unknown pop. var sx= s/ √(n) Binomial Random Variable E(X)=n*p Var(X)=n*p*(1-p)=n*p*q Standardized RV is normalized mean = 0, σ = 1. Z-score: # of σ a given observation is from population mean. Z=(x-µ)/σ Variance D Correlation Coefficient (CC) -1 < CC < 1 if CC = 0, X & Y are uncorrelated rx,y=cov(x,y)/σxσy=√R2 C Appropriate Test structure: H0:b1=0; Ha:b1≠0 Test: tb1=(b^ 1-b1)/sb^1 Decision Rule: reject H0 if t>+t critical or if t< -tcritical Simple linear regression Regression coefficient Coefficient of Determination(R2) %age of total var. in Y explained by X R2 =( SSR / SST )=1-( SSE / SST) =explained variation/total variation LR model: Yi=b0+b1Xi+Ei Yi = Dependent variable estimated value of Yi, given value of Xi Xi = independent variable b0 =intercept term; represents Y if X =0 b1 = slope coefficient; measures change in Y for 1 unit change in X b^ 1=cov (X,Y)/ σ2(X) 37Karuna - +91 8080 00 5533
  38. 38. www.edupristine.com38Karuna - +91 8080 00 5533
  39. 39. www.edupristine.com Online platform for enhanced learning experience • All the courses materials are uploaded on website and available 24*7 online for reference • Chapter wise quiz to monitor your performance and gauge the Part of preparation by the students • Interactive forums for doubt clearing and exchanging the ideas for preparation • News forums to provide most updated news on websites. • Feedback mechanism, which enables us to provide you real time solutions for your needs 39Karuna - +91 8080 00 5533
  40. 40. www.edupristine.com Trained professionals from various institutions 40Karuna - +91 8080 00 5533
  41. 41. www.edupristine.com Content management introduces discipline in learning Neev provides solution for content management and scheduling 41Karuna - +91 8080 00 5533
  42. 42. www.edupristine.com Practice Questions Neev provides solution for instantaneous feedback and collective learning opportunity for students 42Karuna - +91 8080 00 5533
  43. 43. www.edupristine.com Pristine’s teaching methodology and faculty has got rave reviews from the students of previous batches The coaching classes conducted by Pristine Careers for FRM 2007 have helped me immensely in passing FRM 2007 exam. The classes were simple, lively and conducted by practicing finance professionals. Open discussions helped in understanding and remembering many of the concepts. Mr Mohan Rao, Senior Manager of a leading Public Sector Bank. It was a great experience to attend the FRM Classes organized by Pristine Career .Most of the concept which one has to understand to clear the FRM Exam were explained in the best way and doubts were clarified. Pristine Careers was very helpful in clearing the FRM Exam for a candidate like me who had Zero experience of Credit and Market Risk. I would recommend all the prospective FRM Candidates and to all Risk Management Student to attend the classes organized by Pristine Careers. Ujjwal Jain, Deputy Manager Treasury Mid-Office, Investment Bank I am glad to see that I passed all the four PRM exams at the same sitting. The exams are fairly tough and contain just the right mix of quantitative and theoretical questions. Thanks to Pristine, I knew beforehand what kind of questions to expect in actual PRM and how to approach the questions. I owe my success to valuable question bank provided by Pristine. Girish Khare, December 2010 43Karuna - +91 8080 00 5533
  44. 44. www.edupristine.com Agenda • About Pristine • FRM and PRM Exams • Resources • Overall Exam Analysis • Analysis of Quantitative Analysis • Analysis of Market Products • FAQs • Pristine FRM Offering • Contact Us 44Karuna - +91 8080 00 5533
  45. 45. Pristine www.edupristine.com Questions For Registration or Query Karuna (for Mumbai) : 8080005533 Sandeep ( for other cities) : 9560214422

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