The FRM certification requires passing two exams: Part 1 and Part 2. While both exams share the same format (100 multiple-choice questions in 4 hours), they differ significantly in content, difficulty, and the skills they test. Understanding these differences is crucial for effective exam planning and preparation.
This guide provides a comprehensive comparison to help you understand what to expect from each part and how to approach your FRM journey strategically.
Quick Overview
Exam Structure Comparison
| Aspect | Part 1 | Part 2 |
|---|---|---|
| Questions | 100 multiple choice | 100 multiple choice |
| Duration | 4 hours | 4 hours |
| Time per Question | 2.4 minutes | 2.4 minutes |
| Topic Areas | 4 | 6 |
| Prerequisite | None | Must pass Part 1 first |
| Results Valid | 4 years (to pass Part 2) | Permanent |
| Primary Focus | Tools, models, foundations | Application, regulation, practice |
| Question Style | More calculations | More scenario-based |
Part 1 Topics & Weights
Part 1 focuses on the foundational tools and concepts of risk management. It's heavily quantitative and builds the mathematical and theoretical foundation for Part 2.
Part 1 is heavily computational. Expect lots of calculations involving option pricing, bond duration/convexity, VaR, regression analysis, and probability. Strong quantitative skills and calculator proficiency are essential. Many questions test your ability to apply formulas correctly under time pressure.
Part 2 Topics & Weights
Part 2 applies the foundational knowledge from Part 1 to real-world risk management. It covers specific risk types, regulatory frameworks, and current industry issues.
Part 2 is more conceptual and scenario-based. While calculations exist, many questions test your understanding of risk management frameworks, regulatory requirements (Basel), and real-world application. Questions often present scenarios and ask you to identify appropriate responses, interpret results, or evaluate strategies.
Difficulty Comparison
Which part is harder? The answer depends on your background, but here's what the data and candidate feedback suggest:
| Difficulty Factor | Part 1 | Part 2 |
|---|---|---|
| Math intensity | High - many calculations | Moderate - some calculations |
| Formula memorization | High - many formulas needed | Moderate - fewer formulas |
| Topic breadth | 4 areas (focused) | 6 areas (broader) |
| Reading volume | Moderate | High (more qualitative content) |
| Time pressure | High (calculation time) | Moderate (reading time) |
| Builds on prior knowledge | Finance/math background helpful | Part 1 knowledge essential |
Part 1 is harder for most candidates, reflected in its lower pass rates (42-46% vs 52-58%). The heavy quantitative focus challenges those without strong math backgrounds, and calculation errors under time pressure are common.
However, difficulty is subjective. Candidates with strong quantitative skills but less industry experience may find Part 2 harder due to its regulatory content and broader topic coverage. Part 2 also requires more reading and memorization of frameworks and ratios.
Pass Rates
Pass rates provide objective evidence of relative difficulty:
Historical Pass Rates
| Exam | Part 1 | Part 2 |
|---|---|---|
| November 2024 | 46% | 52% |
| August 2024 | 42% | 55% |
| May 2024 | 44% | 54% |
| November 2023 | 42% | 58% |
| 5-Year Average | ~44% | ~55% |
Several factors contribute: (1) Selection effect - Part 2 candidates already passed Part 1, so the pool is stronger; (2) Experience - candidates know what to expect after Part 1; (3) Less computation - fewer calculation errors; (4) Part 1 foundation - Part 1 knowledge makes Part 2 easier to learn.
Study Time Requirements
| Study Factor | Part 1 | Part 2 |
|---|---|---|
| GARP Recommendation | 200-240 hours | 200-240 hours |
| Candidate Average | 240-280 hours | 220-260 hours |
| Minimum (strong background) | ~150 hours | ~150 hours |
| Typical Duration | 3-5 months | 3-4 months |
| Practice Questions | 1,500-2,500 | 1,500-2,000 |
| Mock Exams | 4-6 full mocks | 4-6 full mocks |
Study Time Breakdown by Topic
Part 1 Allocation (~250 hours)
- Quantitative Analysis (20%): ~50 hours
- Foundations of Risk Management (20%): ~45 hours
- Financial Markets and Products (30%): ~65 hours
- Valuation and Risk Models (30%): ~65 hours
- Review and Practice: ~25 hours
Part 2 Allocation (~230 hours)
- Market Risk (20%): ~45 hours
- Credit Risk (20%): ~45 hours
- Operational Risk (20%): ~40 hours
- Liquidity Risk (15%): ~30 hours
- Investment Management (15%): ~30 hours
- Current Issues (10%): ~20 hours
- Review and Practice: ~20 hours
Study Strategies by Part
- Master your calculator - every keystroke should be automatic
- Create and memorize formula sheets (see our FRM Formula Sheet)
- Start with Quantitative Analysis - it underlies everything
- Practice calculations under time pressure
- Focus heavily on VaR and option pricing
- Do 2,000+ practice questions minimum
- Understand derivations, not just memorization
- Review probability and statistics thoroughly
- Review Part 1 concepts before starting
- Focus on understanding frameworks, not just facts
- Learn Basel requirements thoroughly (capital, LCR, NSFR)
- Practice scenario-based questions
- Study Current Issues last (content changes annually)
- Make comparison tables for similar concepts
- Connect topics - credit risk links to CVA, Basel, etc.
- Focus on the "why" behind regulatory requirements
Key Formula Focus Areas
| Part 1 Must-Know Formulas | Part 2 Must-Know Formulas |
|---|---|
| Black-Scholes option pricing | Expected Loss = PD × LGD × EAD |
| VaR (parametric, historical) | CVA and DVA calculations |
| Bond duration and convexity | LCR and NSFR ratios |
| Put-call parity | Marginal VaR, Component VaR |
| Greeks (Delta, Gamma, Vega, Theta) | Information Ratio, Sharpe Ratio |
| Linear regression (coefficients, R²) | Stress testing approaches |
| CAPM, APT | Merton model for credit risk |
When to Take Each Part
Planning your exam timeline is crucial for success. Here are common approaches:
Option 1: Sequential (Most Common)
Option 2: Same Exam Window (Aggressive)
Take Part 1 in the morning and Part 2 in the afternoon of the same day.
- Pros: Complete faster, only one exam day, momentum
- Cons: 8+ hours of testing, requires studying both parts simultaneously, if you fail Part 1 your Part 2 attempt is wasted (deferred)
- Best for: Candidates with strong backgrounds and extensive study time (400+ hours)
Option 3: Extended Timeline
Take Part 1 in Year 1, Part 2 in Year 2 (or later).
- Pros: Less pressure, more time to prepare for each part
- Cons: Part 1 knowledge may fade, longer to certification, risk of losing momentum
- Best for: Candidates with very demanding jobs or other commitments
For most working professionals, we recommend Option 1: Part 1 in May, Part 2 in November. This provides adequate preparation time for each part while maintaining momentum. You'll complete certification within a calendar year, and Part 1 knowledge will be fresh for Part 2.
Taking Both Parts Same Day
GARP allows candidates to attempt both Part 1 and Part 2 in the same exam window. Here's what you need to know:
How It Works
- Morning: Part 1 exam (4 hours)
- Break: ~1 hour between exams
- Afternoon: Part 2 exam (4 hours)
- Condition: You must pass Part 1 to have your Part 2 scored
- If you fail Part 1: Your Part 2 is automatically deferred to the next window (at no additional cost)
Should You Take Both Same Day?
| Consider Same Day If... | Take Separately If... |
|---|---|
| Strong quantitative background (quant, engineering, physics) | New to finance or risk management |
| Can dedicate 400+ hours to study | Limited study time available |
| Already familiar with most Part 1 topics | Need to learn Part 1 material from scratch |
| Want to complete ASAP for career reasons | Prefer a sustainable study pace |
| Comfortable with high-stakes testing | Test anxiety or prefer lower stakes |
| Have taken similar exams (CFA, actuarial) | First professional certification |
Taking both parts same day is risky. Statistics suggest most same-day candidates focus heavily on Part 1, underestimate Part 2, and pass Part 1 but fail Part 2. If you choose this route, ensure you've dedicated equal study time to both parts and are genuinely prepared for the full 8+ hours of testing.
Frequently Asked Questions
You must pass Part 1 before Part 2 (or take them same day). Focus entirely on Part 1 first unless you're attempting both parts in the same window. Part 1 provides the foundational knowledge that Part 2 builds upon, so strong Part 1 understanding makes Part 2 easier.
Part 1 results are valid for 4 years. If you don't pass Part 2 within 4 years of passing Part 1, your Part 1 result expires and you must retake it. Given the 4-year window, there's no need to rush, but most candidates complete Part 2 within 1-2 years to maintain momentum.
No. Once you pass Part 1, you don't need to retake it (as long as you pass Part 2 within 4 years). You can retake Part 2 as many times as needed. Each retake requires paying the exam registration fee again.
No, but it has more conceptual and qualitative content than Part 1. Part 2 requires understanding frameworks (Basel, operational risk), regulatory requirements, and real-world application. While there's more reading, you still need to understand calculations for market risk, credit risk, and liquidity metrics. The best approach is understanding the "why" behind concepts, not just memorizing facts.
Partially. The curriculum and readings are different for each part, so you'll need separate materials. However, the same prep provider (Schweser, Bionic Turtle, etc.) often offers bundles for both parts. Some foundational knowledge from Part 1 (VaR, derivatives, statistics) is assumed in Part 2, but Part 2 has its own unique content.
Yes, briefly. Before diving into Part 2, spend a few hours reviewing key Part 1 concepts: VaR, option Greeks, bond duration/convexity, and basic statistics. These concepts appear throughout Part 2. If you take Part 2 shortly after passing Part 1 (e.g., May Part 1 → November Part 2), this review can be quick. If there's a longer gap, spend more time refreshing.
GARP doesn't publish separate statistics for same-day candidates. Anecdotally, same-day candidates have slightly lower Part 2 pass rates because: (1) fatigue from the morning exam affects afternoon performance, (2) many underestimate Part 2 preparation, and (3) the stakes are higher. If you're well-prepared for both parts, same-day is viable—but it's not easier than taking them separately.
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