A "hot topic" for examiners, used to update prior probabilities as new information becomes available.
is a foundational pillar of the FRM Part I curriculum, accounting for 20% of the exam . This book transitions from general risk theory to the mathematical toolkit used to identify and manage risk, starting with Chapter 1: Fundamentals of Probability . Guide to Quantitative Analysis (Book 2) 1. Core Subject Areas
Recent additions include Machine Learning (ML) methods such as neural networks, decision trees, and regularization (LASSO/Ridge). 2. Strategic Focus for Page 1 & Chapter 1 Page 1 FRM PART I BOOK 2: QUANTITATIVE ANALysis...
Simple and multiple linear regressions, diagnostics (addressing issues like multicollinearity and heteroskedasticity), and predictive performance.
Fundamentals of probability, random variables (discrete and continuous), and common univariate/multivariate distributions. A "hot topic" for examiners, used to update
Distinguishing between independent events (where the occurrence of one doesn't change the probability of the other) and mutually exclusive events (which cannot occur at the same time).
As you begin with the first reading ( Fundamentals of Probability ), prioritize these high-yield concepts that GARP frequently tests: Guide to Quantitative Analysis (Book 2) 1
The curriculum typically spans 13 to 15 readings, building from basic statistics to advanced predictive modeling:
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