What to Know About the FRM Exam
There are a ton of different career paths you can take after you finish high school. Some go into medicine, others go into marketing, but one of the most challenging and rewarding career paths you can take is into the highly competitive world of finance. If you want to be successful in your career, then you need to do something to set yourself apart.
One of the best ways to do this is by taking the FRM Exam, especially if you're interested in the risk management aspect of finance. What is the FRM Exam? Read on to learn everything you need to know about it!
What Is the FRM Exam?
The FRM Exam is an exam that is offered to people who wish to build a career in the world of financial risk management. It is administered by the Global Association of Risk Professionals (GARP) and is recognized throughout the world. It is a very complex exam that can set people up for success in their careers once they pass and receive their certification in risk management.
The FRM Exam is the most respected certification that risk management professionals receive. While it is not a required component of all jobs in the financial risk management world, it is a preferred qualification.
Who Is Eligible to Take the FRM Exam?
Anyone who pays the fee for the exam is eligible to take the exam. This means that test-takers range from people who have multiple degrees in accounting or finance to people who have just wrapped up their GED.
That doesn't mean, however, that anyone can pass this exam. In fact, only 51 percent of test-takers passed in 2019.
As previously stated, the exam is complex, and it requires a thorough knowledge of the background concepts. Therefore, people who enter into this exam are going to fare better if they have spent a significant amount of time studying finance or working in the finance world.
When Is the FRM Exam Offered?
Part of what makes the FRM Exam so challenging is that you can't just walk into an exam center and take it when you're ready. The FRM Exam is only offered two times per year, so if you miss out on one exam, you have to wait a while to try it again. Exams are proctored in May and November of each year.
Be sure to check current examination dates to determine when you're going to sit for the exam.
FRM Exam Prep Tips
Just like any other exam, there are a number of different tips to follow when taking the FRM Exam. The number one thing you can do to set yourself up for success on the FRM Exam is to spend a significant amount of time studying for the exam.
GARP recommends that you spend at least 275 hours studying for each portion of the exam. Since there are two parts to the exam, this means that you will need to spend 550 hours studying, at a minimum. Many people find that they need to study up to 800 in order to feel fully prepared.
Don't want to study for the exam all on your own? Exam companies have heard your concerns and there are a number of different companies that provide test prep services and study materials.
The night before each exam, be sure to practice good self-care and make sure your body and mind are physically ready for the rigorous examination process.
What Is the FRM Exam Format?
The FRM exam has two different parts, and it is recommended that you take them on separate occasions. The first portion of the exam costs up to $725 for registrations, while the second portion of the exam costs up to $650. The earlier you sign up, the less expensive it will be.
Expect to receive your exam results about 45 days after you sit for your exam.
FRM Part 1
Part 1 of the FRM exam is the longer of the two portions, coming in at 100 multiple-choice questions. Test takers should expect to spend at least four hours during the morning to complete it.
There are four different areas for which the first part of the FRM exam tests: the Foundations of Risk Management, Quantitative Analysis, Financial Markets and Products, and Valuation and Risk Models. The first two areas account for 40 percent of the exam, while the second two areas account for 60 percent.
FRM Part 2
Part 2 of the FRM Exam is technically the short of the two exams, with 80 multiple-choice questions. Despite the reduction in questions, test-takers still have four hours to complete the exam.
There are six topic areas covered in Part 2 of the exam: Market Risk Measurement and Management, Credit Risk Measurement and Management, Operational and Integrated Risk Management, Liquidity and Treasury Risk Management, Risk and Investment Risk Management, and Curring Issues Arising in Financial Markets.
The first three sections account for 60 percent of the exam, the third and fourth make up 30 percent, and the sixth makes up 10 percent.
Where Can You Work After Passing?
You'll find that passing the FRM Exam opens the doors to a number of different career positions. The average salary you'll receive is anywhere between $51k and $130k per year. Look for jobs in places like asset management firms, investment banks, and even some smaller, local options.
After passing the exam, don't be surprised if financial agencies start banging down your door trying to offer you a job.
Prepare for a Future in Financial Risk Management!
Gearing up for a career in the finance world takes a lot of planning and preparation. If you don't already have the FRM exam on your career prep list, then it might be time to re-evaluate your list. While the FRM Exam is no walk in the park, you definitely won't regret having taken it once those job offers start rolling in!
Are you looking for more great advice that will help you advance in your career? You've come to the right place. Flip through the rest of our blog for tons of great tips that'll inform your next big career move!
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