Question 1Risk-adjusted performance measures
A fund returned 10.4% against its benchmark's 8.9%. Its tracking error against the benchmark was 2.5%, its volatility was 16% and the risk-free rate was 3%. The fund's information ratio is closest to:
The Part I exam format
Part I has 100 equally weighted multiple-choice questions in four hours, taken on a computer at a test center. It covers four topic areas.
| Questions | 100, equally weighted |
|---|---|
| Time | 4 hours |
| Format | Multiple choice, computer-based |
| 2027 windows | May, August and November |
How the exam is built
- 100 multiple-choice questions, all weighted equally.
- Four hours, computer-based, at a test center: PSI for most candidates, ATA in China Mainland, Hong Kong SAR China and Thailand.
- Two sheets of scratch paper and a pencil are provided. Formula sheets are not.
- Only GARP's approved business calculators may be used; an exam taken with any other is not graded.
The four topic areas
| Topic area |
|---|
| Foundations of Risk Management |
| Quantitative Analysis |
| Financial Markets and Products |
| Valuation and Risk Models |
Approved calculators
- HP 12C (including the Platinum, 25th and 30th Anniversary editions and the Prestige)
- TI BA II Plus (including the Professional)
- HP 10B II
- HP 10BII+
- HP 20B
Part I and Part II
- Part I and Part II can be sat on the same day only in August; in May and November they can be sat in the same window on different days.
- If you fail or miss Part I in a window where you also sat Part II, Part II is not graded.
- You have four years after passing Part I to pass Part II.
Try 4 questions
Question 2Common distributions
A portfolio holds 10 loans, each with a 5% probability of default over the year, and defaults are independent. Given 0.958 = 0.6634, the probability that exactly two loans default is closest to:
Question 3Interest rate and currency swaps
A company pays a fixed rate of 3.8% and receives a floating rate on a notional principal of $100 million, with semiannual payments. The floating rate for the current period, set at its start, is 3.2%. Both rates are per annum with semiannual compounding. What is the net payment at the end of the period?
Question 4Bond prices, spot and forward rates
A three-year bond pays a 5% annual coupon on a face value of $100. Annually compounded spot rates are 3.0% (one year), 3.8% (two years) and 4.5% (three years). The bond's price is closest to:
Next step
Questions people ask
How many questions are on Part I?
100 multiple-choice questions, all equally weighted.
How long is the Part I exam?
Four hours.
Which calculators can I use?
Only GARP's approved business calculators: the HP 12C (including its Platinum, Anniversary and Prestige editions), the TI BA II Plus (including the Professional), the HP 10B II, the HP 10BII+ and the HP 20B.
What are the four Part I topic areas?
Foundations of Risk Management, Quantitative Analysis, Financial Markets and Products, and Valuation and Risk Models.