FRM Part I · Paper 1
FRM Part I Exam: Preparation Guide and Strategy
FRM Part I is a computer-based GARP exam with 100 equally weighted multiple-choice questions in 4 hours. It covers Foundations of Risk Management, Quantitative Analysis, Financial Markets and Products, and Valuation and Risk Models. You prepare by learning concepts, practising calculations, and drilling timed question sets.
FRM Part I tests whether you understand the core tools of financial risk. It has 100 equally weighted multiple-choice questions in 4 hours. The questions span four topics: Foundations of Risk Management, Quantitative Analysis, Financial Markets and Products, and Valuation and Risk Models. Some questions are calculations. Others ask you to pick the correct concept, spot a flaw in a statement, or interpret a result.
The paper rewards breadth. You need the formulas, but you also need to know when each tool applies and what its limits are. Examples: when VaR understates risk, why a regression has a problem, how duration and convexity change a bond price estimate, and what went wrong in a financial disaster. Many questions are short. A few need several steps, and a financial calculator saves time on those.
GARP scores FRM exams on a pass/fail basis. It publishes no pass mark or pass percentage. Candidates also receive quartile results that compare them with others. So do not aim for a target score. Aim to be reliably correct across all four topics. Candidates tend to do well when they study every chapter, practise questions under time limits, and review each wrong answer. GARP revises the curriculum every year, so use the current Study Guide and Learning Objectives as your checklist.
FRM Exam Part I: chapters and topics
Foundations of Risk Management
The Building Blocks of Risk Management
Foundations of Risk Management
How Do Firms Manage Financial Risk?
Foundations of Risk Management
The Governance of Risk Management
Foundations of Risk Management
Credit Risk Transfer Mechanisms
Foundations of Risk Management
Modern Portfolio Theory (MPT) and the Capital Asset Pricing Model (CAPM)
- Portfolio Risk and Return, Diversification
- Markowitz Efficient Frontier and Optimal Portfolios
- Capital Market Line and Two-Fund Separation
- CAPM and the Security Market Line
- Performance Measures: Sharpe, Treynor, Jensen, Information Ratio
- Single-Index Model, Market Model and Regression
- CAPM Limitations and Extensions
Foundations of Risk Management
The Arbitrage Pricing Theory and Multifactor Models of Risk and Return
Foundations of Risk Management
Principles for Effective Data Aggregation and Risk Reporting
Foundations of Risk Management
Enterprise Risk Management and Future Trends
Foundations of Risk Management
Learning From Financial Disasters
- Lessons from Financial Disasters: Overview
- Interest Rate Risk: Savings and Loan Crisis and Orange County
- Funding Liquidity Risk: Metallgesellschaft, LTCM, Lehman
- Rogue Trading and Operational Failures
- Model Risk and Valuation Failures
- Financial Crisis of 2007-2009 and Securitization
- Governance, Reputation and Compliance Failures
Foundations of Risk Management
Anatomy of the Great Financial Crisis of 2007-2009
- Origins of the 2007-2009 Financial Crisis
- Securitization and the Originate-to-Distribute Model
- Credit Rating Agencies and Structured Product Failures
- Shadow Banking, Leverage and Liquidity Runs
- Crisis Events and Institutional Failures
- Amplification Mechanisms and Systemic Risk
- Policy Responses and Regulatory Lessons
Foundations of Risk Management
GARP Code of Conduct
Quantitative Analysis
Fundamentals of Probability
Quantitative Analysis
Random Variables
Quantitative Analysis
Common Univariate Random Variables
Quantitative Analysis
Multivariate Random Variables
Quantitative Analysis
Sample Moments
Quantitative Analysis
Hypothesis Testing
Quantitative Analysis
Linear Regression
- Simple Linear Regression Model and OLS
- OLS Assumptions and Properties of Estimators
- Hypothesis Testing and Confidence Intervals for Coefficients
- Goodness of Fit: R-squared, ESS, TSS, SSR
- Multiple Regression and Joint Hypothesis Tests
- Heteroskedasticity, Multicollinearity and Model Misspecification
- Dummy Variables and Regression Interpretation
Quantitative Analysis
Regression with Multiple Explanatory Variables
Quantitative Analysis
Regression Diagnostics
Quantitative Analysis
Stationary Time Series
Quantitative Analysis
Nonstationary Time Series
Quantitative Analysis
Measuring Return, Volatility, and Correlation
Quantitative Analysis
Simulation and Bootstrapping
Quantitative Analysis
Machine-Learning Methods
- Overview of Machine Learning and Types of Learning
- Overfitting, Bias-Variance Tradeoff and Model Validation
- Data Preparation and Feature Engineering
- Regularization: Ridge, LASSO and Elastic Net
- Logistic Regression and Classification Metrics
- Decision Trees, Ensembles and K-Nearest Neighbors
- Unsupervised Learning: Clustering and PCA
- Neural Networks and Deep Learning
Quantitative Analysis
Machine Learning and Prediction
- Machine Learning Basics and Types of Learning
- Overfitting, Bias-Variance Tradeoff and Data Splitting
- Regularization: Ridge, LASSO and Elastic Net
- Dimension Reduction and Principal Components Analysis
- Clustering: K-Means and Hierarchical Methods
- Decision Trees, Ensembles and Random Forests
- Neural Networks and Deep Learning
- Model Evaluation and Classification Metrics
Financial Markets and Products
Banks
Financial Markets and Products
Insurance Companies and Pension Plans
Financial Markets and Products
Fund Management
Financial Markets and Products
Introduction to Derivatives
Financial Markets and Products
Exchanges and OTC Markets
Financial Markets and Products
Central Clearing
Financial Markets and Products
Futures Markets
- Futures Contract Basics and Market Structure
- Margin, Marking to Market and Daily Settlement
- Clearinghouses and Counterparty Risk
- Delivery, Settlement and Order Types
- Hedging with Futures and Basis Risk
- Stock Index Futures and Beta Hedging
- Interest Rate Futures and Treasury Futures
- Futures Pricing, Rolling and Hedge Accounting Issues
Financial Markets and Products
Using Futures for Hedging
Financial Markets and Products
Foreign Exchange Markets
Financial Markets and Products
Pricing Financial Forwards and Futures
- Forward and Futures Contracts Basics
- Cost of Carry and Forward Pricing Without Income
- Forwards on Assets with Known Income or Yield
- Storage Costs, Convenience Yield and Commodity Forwards
- Futures Prices, Expected Spot Prices and Valuation of Forwards
- Treasury Bond Futures and Eurodollar Futures
- Hedging with Futures and Optimal Hedge Ratio
Financial Markets and Products
Commodity Forwards and Futures
Financial Markets and Products
Options Markets
Financial Markets and Products
Properties of Options
Financial Markets and Products
Trading Strategies
Financial Markets and Products
Exotic Options
Financial Markets and Products
Properties of Interest Rates
Financial Markets and Products
Corporate Bonds
Financial Markets and Products
Mortgages and Mortgage-Backed Securities
Financial Markets and Products
Interest Rate Futures
Financial Markets and Products
Swaps
Valuation and Risk Models
Measures of Financial Risk
Valuation and Risk Models
Calculating and Applying VaR
Valuation and Risk Models
Measuring and Monitoring Volatility
Valuation and Risk Models
External and Internal Credit Ratings
Valuation and Risk Models
Country Risk: Determinants, Measures, and Implications
Valuation and Risk Models
Measuring Credit Risk
Valuation and Risk Models
Operational Risk
Valuation and Risk Models
Stress Testing
Valuation and Risk Models
Pricing Conventions, Discounting, and Arbitrage
Valuation and Risk Models
Interest Rates
Valuation and Risk Models
Bond Yields and Return Calculations
Valuation and Risk Models
Applying Duration, Convexity, and DV01
Valuation and Risk Models
Modeling Non-Parallel Term Structure Shifts and Hedging
Valuation and Risk Models
Binomial Trees
Valuation and Risk Models
The Black-Scholes-Merton Model
Valuation and Risk Models
Option Sensitivity Measures: The "Greeks"
How to prepare FRM Exam Part I
Plan your study around the four topics and the current GARP Learning Objectives. Build understanding first, then speed. Leave the last weeks for timed practice and revision.
- Download the current GARP Study Guide and Learning Objectives. Turn them into a checklist, and tick off each objective only when you can explain it or solve a question on it.
- Pick your exam window. GARP offers Part I in May, August and November. The November 2026 window is November 14-20, 2026. Count back from your window and give each topic a fixed block of weeks.
- Start with Quantitative Analysis: probability, random variables, distributions, sample moments, hypothesis testing, regression, time series, and simulation. These tools return in the other topics, so weak foundations hurt you everywhere.
- Move to Financial Markets and Products, then Valuation and Risk Models. For each chapter, write the key formulas on one page and work 5-10 numerical questions. Learn the calculator keys for present value, yields, and statistics.
- Cover Foundations of Risk Management for concepts. Build short notes on CAPM and multifactor models, governance, risk data aggregation, ERM, credit risk transfer, the financial crisis, and the GARP Code of Conduct. Use cases of financial disasters to remember the causes and lessons.
- After each chapter, do a timed question set and keep an error log. Record the question, why you missed it (concept, formula, arithmetic or misread), and the fix. Review the log weekly.
- In the last four to six weeks, take full 100-question mock exams in 4 hours. Review every wrong answer and every lucky guess. Revise your formula sheets and error log until patterns stop repeating.
- In the final week, do light revision only. Re-read formulas, practise the calculator, and check exam-day rules and logistics. Sleep properly.
Time management in the exam
- You have 4 hours for 100 questions, which is about 2.4 minutes per question on average. Use this as a guide, not a rule. Some questions take 30 seconds and some take 5 minutes.
- Do a first pass and answer the quick questions first. Flag long calculations and return to them. All questions carry equal weight, so easy marks come first.
- Set a hard cap of about 4 minutes on any single question. If you are stuck, make your best guess, flag it, and move on.
- Check progress at fixed points. For example, aim to be near question 25 at about the one-hour mark. Adjust your pace if you are far off.
- Practise your calculator routine in advance. Fast, correct keystrokes for bond prices, yields, and statistics save many minutes over the paper.
- Keep 20 to 30 minutes at the end to revisit flagged questions. Use the time to recheck units, signs, and what the question actually asked. Never leave a question blank.
Mistakes that cost marks in FRM Exam Part I
Memorising formulas without knowing when they apply
Fix: For each formula, write its conditions and one example of where it fails. Practise choosing the right tool before calculating.
Neglecting Quantitative Analysis because it feels heavy
Fix: Study it first and revisit it often. Probability, regression, and time series support VaR, volatility, and credit models later.
Only reading, with too little timed practice
Fix: Do questions after every chapter and full mocks later. Time yourself and review each error.
Arithmetic and unit slips
Fix: Write units next to every number. Check whether the question asks for variance or volatility, and whether the rate is annual or periodic. Sanity-check the size of your answer.
Skipping the qualitative Foundations topic
Fix: Learn the specific lessons from governance, data aggregation, ERM, financial disasters, and the 2007-2009 crisis. Questions often hinge on precise wording.
Using outdated materials
Fix: Match all your notes and question banks to the current Study Guide and Learning Objectives before you start.
FRM Exam Part I: frequently asked questions
How many questions are in FRM Part I and how long is the exam?
FRM Part I has 100 equally weighted multiple-choice questions. You get 4 hours to complete it. It is taken on a computer.
What is the pass mark for FRM Part I?
GARP scores FRM exams on a pass/fail basis and publishes no pass mark or pass percentage. Candidates also receive quartile results that compare them with other candidates. Results are released within eight weeks of the exam window closing.
When can I take FRM Part I?
GARP offers Part I in May, August and November. The November 2026 Part I window is November 14-20, 2026. Check GARP's site for registration deadlines.
Can I take Part I and Part II on the same day?
Only in the August window, not in May or November. If you sit both Parts in the same administration and fail or do not sit Part I, Part II is not graded.
What else do I need to become FRM certified?
You must pass both Part I and Part II. You must also submit two years of full-time relevant financial risk management work experience.