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Did you understand the nine modules of FRM exam?
For the candidates who are new to FRM to apply for FRM, the outline and content of FRM examination should be defined first. Here, I will explain in detail the structure and content of the nine modules of FRM for candidates, as well as the proportion of each subject in the FRM Level 1 exam.

I. Structure:

Module 9-4 is the basic knowledge (quantitative analysis, product knowledge acquisition and valuation method). Only by mastering this knowledge can we enter the remaining risk management modules (market risk, credit risk, operational risk, investment management and current hot topics in financial markets).

For example, applying VaR to estimate the market risk of bonds (market risk management module) will use the basic knowledge of market risk (module 1), normal distribution (module 2) and bond valuation and sensitivity analysis (modules 3 and 4).

Don't spend too much time on some topics, which will affect your study plan. For example, quantitative analysis belongs to the basic knowledge part, but you don't have to master all the exam contents to learn other parts. All you have to master is normal distribution and confidence interval, and regression analysis is also necessary for follow-up study.

It is very important to master the use of special financial calculator. For example, you should be able to use a calculator to calculate the maturity price and yield of bonds. There will be a special part in the e-learning course to explain the use of calculators.

4. Learn step by step. The reason why I will explain the knowledge of the second module in part *9 is because I hope that students can know how to calculate "expected return" and volatility (standard deviation of return) before teaching portfolio theory.

5. Necessary memory. You need to remember the commonly used normal distribution related values (*4 even remembers the T distribution), such as the one-tailed and two-tailed test values with 90%, 95% and 99% confidence intervals.

Second, the proportion and outline of FRM level 1 examination subjects

(1) Risk management basis 20%

The role of risk management

Basic risk types

Measurement and management tools

Create the value of risk management

Modern portfolio theory

Standard and non-standard of capital asset pricing model

exponential model

Risk adjustment performance measurement

Enterprise risk management

Financial disaster and risk management failure

case study

Moral principles and morality as a strategy

(2) Quantitative analysis 20%

Discrete and continuous probability distribution

Population and sample statistics

Statistical inference and hypothesis testing

Parameter estimation of segmentation therapy

Graphical representation of statistical relations

Unit and multivariate linear regression

Monte Carlo method

Correlation estimation and fluctuation using EWMA and GARCH models

Term structure of volatility

(3) Financial market and output 30%

OTC market mechanism

Forward, futures, swaps and options

Interest rate level and interest rate sensitivity index

Fixed income securities derivatives

Interest rates, foreign exchange, stocks

Commodity derivative products

exchange risk

corporate bonds

Credit rating mechanism

(4) Valuation and risk model 30%

Risk grade value

Option valuation

Valuation of fixed income securities

State and Sovereign Risk Model and Management

External and internal credit ratings

Expectations and unexpected losses

operating risk

Stress testing and scenario analysis