Free GARP FRM Part II Current Issues in Financial Markets Practice Questions
Practice 100 free Current Issues in Financial Markets questions for GARP FRM Part II.
100 Questions
28 Easy
56 Medium
16 Hard
2026 Syllabus
Sample Questions
Question 1
Easy
Which factor does the BIS identify as a key driver of the rapid global growth of private credit?
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Correct Answer: B
Solution
B is correct. The BIS attributes private credit's growth to the migration of lending from regulated banks, which face higher capital requirements, toward funds, combined with strong institutional demand for the yield and diversification private credit offers. Borrowers also value the speed and certainty of execution from a single lender.
Question 2
Medium
Why does a high level of public debt create tension between fiscal and monetary policy, according to the BIS?
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Correct Answer: B
Solution
B is correct. With high public debt, monetary tightening raises debt-service costs and can strain public finances, creating pressure on the central bank to keep policy loose, a risk of fiscal dominance. This is the central tension: the stance needed for price stability may conflict with debt sustainability.
Question 3
Hard
Which combination of policy stances is MOST likely to lie outside the region of stability over a sustained horizon?
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Correct Answer: B
Solution
B is correct. A sustained combination of large primary deficits and accommodative monetary policy while inflation exceeds target tests all three boundaries at once (price stability, debt sustainability, and ultimately financial stability) and lies outside the region. The other mixes are consistent with the joint stability the region describes.
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