How to prepare for Exam 3?

[Saurabh Yadav]

How to prepare for Exam 3?

[Anonymous]

Hi Mukul,

I hope you are doing fine.

After passing my Exam 2 I am now studying for Exam 3. I must admit this is the most relevant reading I am going through. I can directly relate some of it to the work I did at my internship earlier in risk management. I find it most in line with the actual work that is done in risk management.

As you have already passed all 4 exams I was hoping if you could guide me through. I would like to know how to study for Exam 3, like which topics are highly important.

Your site has been very helpful to my preperation for the 2 earlier exams and I hope to use it for 3rd one too.

Regards,
Saurabh Yadav

[Anonymous]

Saurabh,

My recommendation is pretty much the same: study the handbook. Riskprep is an inexpensive resource as well, which is not very time consuming to go through.
For any topics that are not clear, you can refer Hull which does cover many of the topics. I am there to help as well if needed.

Having done Exams 1 and 2 first before attempting Exam 3 helps a great deal as then you have the context for instruments, the markets and the math. Even though you can take the exams in any order, I am becoming increasingly convinced that they are best taken one after the other (ie, in the order 1, 2, 3 and 4) because each exam builds on the material from the previous one.

Exam 3 is the crux of PRMIA’s testing – exams 1 and 2 set the context and the basic background. The beginning for Exam 3 is a bit dry in my view in the handbook, but becomes juicier soon as VaR starts. Thereafter credit risk is a bit scattered and one may struggle to get their arms around it, and can take multiple readings. I have summarized the 5 portfolio approaches to credit risk on the tutorials at a high level, you may find them useful. Basel is a bit dated in the handbook as it was published a while ago. The new supplemental material consists of papers published, and is oriented to practitioners, not exam-takers. So you have to think about how to best read them with a view to writing the exam.

At the end, Exam 3 and also 4 are very useful to give you the understanding of risk in a practical way.

Good luck,
Mukul

[Author]

Posts