How to study for FRM Parts I and II

Effective FRM study does four things with every topic: understand the idea, retrieve it without help, apply it to a question and repair what went wrong. Reading hours on their own show none of these. The routine below works for both parts, with different outputs for each.

Let GARP's documents set the scope

GARP's study materials page holds the learning objectives, the study guide and the required readings for your exam year. The learning objectives are the most useful of these, because their verbs tell you whether a topic needs describing, calculating, comparing or evaluating.

Registered candidates also get two full-length practice exams for each part: 100 questions for Part I, 80 for Part II. Save them for later in your preparation. Part II also has required online readings for current issues; put them in the plan with dates rather than treating them as background news.

Diagnose before you plan

Attempt a short spread of questions in week one. For Part I, separate maths problems from product problems: if compounding is shaky, reading more about swaps will not help, and if you cannot draw a swap's cash flows, faster calculator work will not help either. For Part II, check whether you can say why a measure suits a situation, not only how it is calculated.

Part I: build method cards

For each method, write five things without copying the textbook: what it is for, the inputs and their units, the assumptions, one worked calculation and what the answer means. Then change one input and predict the direction of the result before recalculating. A wrong prediction tells you the financial relationship needs work even when the arithmetic is right.

For products, draw the payoff or the cash flows before valuing anything. Valuation questions are much easier once you can see what the holder receives and when.

Part II: build scenario maps

Part II readings are better summarised as small scenarios: the exposure, the measure or process used, the decision it informs, its limitations and one related risk that could change the outcome. Do this for the required online readings as well, recording the author's main argument.

Here is an example worth working through. A portfolio's value-at-risk has been estimated from two calm years of data. What does that figure assume, how would a stressed period change its usefulness, and what extra information would a risk manager want before relying on it? There is no single right answer to memorise; the aim is to practise judging a measure rather than computing it.

Protect the weekly review

However you divide your week, keep the short closed-book recall sessions and the debrief of a mixed set fixed, and let new reading move around them. In Part I a longer session might link a payoff to a valuation method; in Part II it might compare responses to a liquidity squeeze.

At the end of each week, ask three questions: what can I now do without help, which errors repeated, and which older topics are fading? Let the answers decide the next week. Rushing through missed chapters without testing them only hides the gap.

Keep the error log small

Record a cause and a next action, not a copy of the explanation. Useful causes are a missing concept, a wrong input, a unit error, an unsupported assumption, a misread instruction and slow execution. Review lucky guesses the same way.

Mix topics, then use the official mocks

Start mixing topics once the foundation methods are secure; until then a chapter label does part of the work for you. Use GARP's practice exams to check pacing: four hours for 100 questions in Part I is 2.4 minutes each, and for 80 questions in Part II it is three minutes each. Debrief each mock before taking the next.

Practise with the calculator you will use on the day. GARP allows only the HP 12C and its variants, the Texas Instruments BA II Plus (including the Professional), and the HP 10B II, 10B II+ and 20B.

Qualifico's FRM practice and flashcards support the recall and question practice in this routine. GARP's materials remain the authority on scope. For each paper's format and topics, see the Part I and Part II exam guides.