Hieu Nguyen Phi, FRM

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HieuNP

7 minutes read

Hi all. Today in my blog, I’ll tell you who do not want to spend so much money for studying at centers some tips and strategies in preparing the FRM exams by GARP just only 3 months!

Overview

In my opinion, FRM is a certificate that sufficiently challenges you toughly. Although GARP does not prohibit the undergraduate students from taking part in the examinations, it is well-known recommendation that you should start seeking entry to the exam once you pass CFA (another popular certificate examination) level II which is considered as approximate as Master degree’s knowledge amount and spend at least 300 hours for studying part I and more or less 350 hours for part II. We can do some mental calculations here. Suppose I spend consistently 3 hours per day and 5 days per week (2 remaining days for rest) to study FRM part I, in total it lasts at least 100 days or equivalently 5 months. It’s a real tough after all. Therefore, a really smart strategy to go straight to FRM designation after your name is necessary.

To be more overview, let’s talk about my background and situation. At the end of August 2015 (the year I passed part I exam), I have just stepped into the last year of my four-year International Finance program and hence, I was surrounded by my thesis and numerous required essays. That time was a real nightmare to me when I had to join the FRM exam in November, submit the essay about Mark-Lenin political economics in two days later and submit the thesis proposal in around 3 December. Of course, FRM exam was not my priority. So I applied some “tricky” methods to spend the time I study FRM knowledge as least as possible.

Let’s begin…

My starting point is that fully understanding about each part of the FRM exams is required. Here I assume that you have already sufficient knowledge about the road to the FRM Certificate (if not, please take 5 minutes to visit this link for the overview). There are 4 questions to be solved:

  • What does it examine? For setting appropriate goals and study schedule.
  • How does it examine? For suitable strategies during the exam.
  • How long does it examine? To obtain the idea which I’ll do some ‘rest-do loops’ based on.
  • How often does it examine? To make my backup plan in the case of failure :D

I’ll take part I as my example. For part I, general and basic knowledge about risk management is examined. Particularly, they include

  • Foundations of risk management subject (20%) focuses on mainly about risk-return tradeoff, risk governance, code of conducts as well as some case studies.
  • Quantitative analysis (20%) focuses on probability theories, statistics, regressions, time series analysis and its application.
  • Financial markets and products (30%) part is about financial markets, institutions, and various products.
  • Valuation and risk models (30%) concentrates on basic hedging models as well as risk models such as VaR, Taylor approximation.

The exam is designed with 100 4-choice questions and the percentage numbers in brackets above are also proportions in the exam. The exam is given twice per year and each last for consecutive four hours in the morning on the third Saturday of the month (May and Nov), beginning at 8 o’clock.

Principles

Before I present my strategies, we should agree on some principles:

  • Priority order based on certainty or ‘confidence level’: must study > might study > just read > not necessarily read.
  • FRM exams are designed for practical purposes, so we should focus mainly on practical issues and relating knowledge. Those two principles will help you divide each subject into groups.
  • High commitment. My strategies will fail if you do not consistently follow them.
  • Justify the choices based on our knowledge and 100%-confidence-level feelings, otherwise. If we are not sure about any choice, please leave it.
  • Believe in yourselves whenever you mark a choice. Do not re-check!
  • My strategies are to ‘maximize’ our feelings about tests and minimize the number of questions we are not sure about. Therefore, it does not guarantee that my strategies will work 100% on any question.

Preparation

For material preparation, we need:

  • GARP’s textbooks! I highly recommend using them rather than Schweser’s or Bionic’s notes.
  • Bionic questions.
  • Practice exams last 4 years.
  • A beautiful book for noting and some equipment namely micro ball pens, highlighters, sticky notes (do not use pencils and erasers because we need to get used to the feeling of certainty about something and we can ease the words written by pencils by erasers)
  • Pencil for the test. Do not use micro ball pens and erasers because they are not allowed to bring into test-rooms.
  • A best friend or roommate or study group.

Schedule

We have three months in total and here is my plan, rather simply:

  • First two months: read textbooks and take notes carefully. Forget about learning outcomes/objectives recommended by GARP, just read and note[^About the method of note-taking, I’ll present in following posts soon]! This period is considered successful if you satisfy simultaneously following conditions

    • You have a detailed note which can represent a handbook for those textbooks. Thus from here, you do not need those textbooks anymore.
    • You do not skip or ignore any chapters
    • You know clearly what each chapter is about. Just know, not fully understanding.
    • You obtain the general picture of the entire program.
    • You must maintain the habit of doing exercise every day! It’s really important for your brain to continuously obtain new ‘tough’ knowledge.
  • Last month: sit the test! Until you do the mock test with 70% or above correct. I had completed the up-to-date practice exam for part II with 96% correct answers.

Okay, that’s enough.

And now, here are my tips: strategies

Let’s talk about strategies for the first period.

  1. Step 1: Divide each textbook of GARP into groups by themes. Quantitative analysis chapters, for example, can be grouped into 3 categories: probability and statistics, regressions, time-series analysis and applications. Just focus on major groups!
  2. Step 2: Take note based on above groups. Do not take note chapter by chapter because it will interrupt your thought flows and feelings about problems. As for the part I, I’ve already divided four subjects into 12 groups (see above). Therefore, we’ll have gained a group content for average 5 days.
  3. Step 3: Whenever you’ve completed each group content note, leave it for 5 minutes to forget all about what you’ve done, then go back and re-read.
  4. Step 4: While reading, you must think the problems as cause-effect relationships. Always ask yourselves: Why does it happen? What happens next? Make sure you combine with textbooks to be more clear about your inference, whether it right or wrong.
  5. Step 5: Forget your inference, repeat Step 4 after 5 days, 10 days and 21 days.
  6. Step 6: Go on for other groups.
  7. Step 7: Whenever you ensure your clear (not full) understanding about all groups, then read remain minor chapters in textbooks and note briefly (not detailed).

In the second period,…

We focus on techniques as solving multiple choice questions based on principle 4 and 5 as mentioned. Therefore, do exercise as much as possible and pay attention to which questions you fail to solve most frequently. Re-read that piece of knowledge. We review our knowledge and skills by taking a practice exam four times per week. Here are my tips:

  • The most efficient strategy for multiple choice is the exclusive method. It means, for example, your questions tell you to find the choice least likely to occur with 4 choices A, B, C, D. You must sure that 3 of 4 choices are correct and the remaining is our answer.
  • If you face the case of 50-50 pattern; particularly you know A and C are certainly true, and the answer will be either B or D, then calm down and consider each choice. If you can infer either choice is wrong, it is wrong. But if you can infer either choice is true, it’s not necessarily true.
  • For calculation questions, must calculate purposefully! If not, you will certainly drive to another choice in the question.
  • After taking a test, forget it and re-hit after 1 day, 1 weeks. In sum, we do a practice test threefold.
  • You should take part I mock exam in the morning and part II one in the afternoon to replicate the real test.

Conclusion

I’ve listed several tips and strategies to complete FRM exams based on my own experience. Hope this helps everyone. If you have any further questions or any further tips, please share with me.

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About

I am Hieu Nguyen Phi, FRM, a Quantitative Risk Analyst from Ho Chi Minh City, Vietnam. I have a background in International Finance by Foreign Trade University. I have also charterred the FRM certification by [GARP](https://www.garp.org/#!/home) since 2018, after 2 years of experience in Risk management in banking and investing sectors. I also inspired by Mr Sheldon L. Cooper, a fictional character in the CBS television series The Big Bang Theory. He is who he is and doesn't pretend to be someone he isn't. He is so serious about anything he's doing, from academic tasks to real-life businesses. With my inherent laziness, I always look for the best and most efficient (in terms of time and my energy capacity) approach to resolve my practical issues. Currently, I am employed by [Viet Capital Bank](https://www.vietcapitalbank.com.vn) as Risk Analyst and Modeler. My responsibility is to build risk models and to perform required analyses for the bank's Credit Risk Portfolio. For further details about my job, please contact to my personal email **hieunguyenphi94@gmail.com**.