Does FRM level 2 test level 1 content?

[justinturner]

I do not want to take both tests on the same day but I am also concerned I will have to re-study level 1 content (I can do that, I would just prefer not to).

Can I study exclusively for level 2 when the time comes for level 2 and not worry about any of the level 1 material? I obviously wouldn't wipe all of level 1 from my memory, and I would expect to have to retain some basic FRM theory/concepts/common sense but am more concerned with having to restudy quant for example, or any of the formulas/math contained in level 1.

Thanks

 

[David Harper CFA FRM]

Hi @justinturner In my opinion, in general, yes you can mostly "study exclusively for part 2 when the time comes for level 2 and not worry about any of the part 1 material?" with an important qualifier: level 2 builds on level 1 (esp the math and instruments) such that a proper study of part 2 automatically references the needed level 1 material. In this way, yes, my thinking is that you'll find yourself in P2, later, needing occassionallly to re-familiarize/reference an idea or formula from P1 (e.g., two asset variance) but you can pretty much rely on your part 2 study guide and materials to inform you as you go. My "evidence" is this: the syllabus consists of assigned readings by different authors, not a strictly path-dependent curriculum; i.e., it's not quite as if P2 readings are intrinsically dependent on P1 readings. Hull is a good example, as his chapters appear in both. Sure, you might read his text in sequence, but it's not as if you can't first read the BSM material then, six months later, read the volatility smile chapter (letting the material dictate whether you need to reference the earlier chapter). Six months later, in fact, it would not be a great use of time to re-read the BSM, you'd just want to get to the volatility smile, and familiarity would carry you through.

The only obvious path dependency would be chapters which follow earlier chapters in the same book; most of the rest of the material is more path-dependent on a book's context than strictly on P1 readings! e.g., take R30 (Veronesi on RMBS), my view on this reading is that I sometimes need to reference earlier (unassigned) chapters in his book more than I need to reference anything in P1.

I think your characterization here is pretty much spot-on: "I would expect to have to retain some basic FRM theory/concepts/common sense"

I hope that's helpful,