Course Content

5.00
(4 Ratings)

Course Content

Uncategorized
Wishlist

Course Content

Chapter 1: Measures of Financial Risk

  • 1. MVO: Step by Step Walkthrough
    05:47
  • 2. MVO- Four Must Know Things
    04:12
  • 3. Normality and Financial Data
    04:17
  • 4. How to Normalize Financial Data
    13:01
  • 5. Value at Risk
    03:36
  • 6. Expected Shorfall
    04:23
  • 7. Calculation of VaR and Expected Shortfall
    09:16
  • 8. Coherent Risk Measures
    06:14
  • 9. Subadditivity: VaR & Expected Shortfall
    14:16
  • 10. Weighting Risk Measures-Spectral Risk Measures
    06:50
  • 11. Weights as a non decreasing function of the percentile
    09:06

Chapter 2: Calculating and Applying VaR

Chapter 3: Measuring and Monitoring Volatility

Chapter 4: External and Internal Ratings

Chapter 5: Country Risk – Determinants, Measures and Implications

Chapter 6: Measuring Credit Risk
This section provides a comprehensive overview of key topics in credit and market risk management, tailored for FRM exam preparation. Covering 10 concise, curriculum-aligned videos, it explores regulatory and economic capital, the Basel timeline (Basel I, II, 2.5, and III), and essential models like CreditMetrics, Gaussian Copula, and the Vasicek model. Key insights include credit migration, risk correlation across loans, risk allocation, and the relationship between standard deviation and risk contribution. Real-world examples demonstrate how expected loss, worst-case default rates, and log-normal distributions inform loan pricing and capital determination. A must-know foundation for financial risk management. Ideal for FRM exam prep and understanding key risk concepts.

Chapter 7: Operational Risk
This chapter provides a comprehensive overview of operational risk, a critical component of financial risk management covered in the FRM exam. Through nine concise, curriculum-aligned videos, we explore the definition, categorization, and management of operational risk, including major risk types such as cyber risk, compliance risk, and rogue trader risk. The series delves into Basel II and its regulatory frameworks, including the Standardized Measurement Approach (SMA), and explains quantitative methods for modeling operational risk loss distribution using Poisson and lognormal distributions. Key estimation procedures, biases in external data, and scenario analysis are also covered. Additional topics include the power law distribution in operational risk, strategies for reducing risk through RCSA and key risk indicators, and the unique risks insurance companies face, such as moral hazard and adverse selection. A must-watch for FRM candidates looking to master operational risk concepts efficiently.

Chapter 8: Stress Testing
In this FRM prep material, we cover the essential concepts of stress testing as outlined in the FRM exam curriculum. Stress testing is a critical risk management tool used to assess financial institutions' resilience under extreme conditions. This chapter explores various aspects of stress testing, including scenario selection, regulatory requirements, governance, and Basel stress testing principles. We begin by comparing Value-at-Risk (VaR), Expected Shortfall (ES), and stress tests, highlighting their differences in risk measurement. We then dive into scenario selection methods, including historical scenarios, stressing key variables, and ad hoc stress testing, while addressing challenges like non-linearity in risk modeling. Next, we explain reverse stress testing, which works backward from a failure scenario to determine the causes. The chapter also covers regulatory stress tests, including the Dodd-Frank Act Stress Test (DFAST) and the Comprehensive Capital Analysis and Review (CCAR), emphasizing their role in ensuring capital adequacy. We discuss the importance of governance, focusing on board and senior management oversight, internal audit, policy validation, and compliance. Finally, we examine the Basel stress testing principles, introduced to address pre-2008 risk management failures, reinforcing the need for a comprehensive, forward-looking approach to stress testing. Mastering these topics will help FRM candidates understand how stress testing frameworks enhance financial stability, identify vulnerabilities, and ensure regulatory compliance.

Chapter 9: Pricing Conventions, Discounting and Arbitrage
This chapter covers key concepts in fixed income pricing and arbitrage as outlined in the FRM exam curriculum, providing a foundational understanding of how bonds are priced, traded, and analyzed in real-world financial markets. Whether you're preparing for the FRM Part I exam or simply want to strengthen your grasp of bond valuation, this chapter delivers clear, visual explanations based on official curriculum examples. We start with the basics, breaking down the differences between Treasury bills, notes, and bonds, explaining concepts like duration, bid/ask spreads, and mid-market pricing. From there, we explore Treasury bill pricing using discount rates, and how to calculate cash prices and quoted prices for coupon-paying bonds, including the role of accrued interest. You’ll learn how short selling works with bonds and how to evaluate positions when dividends are involved. The chapter also dives into more advanced concepts like the law of one price, showing how to detect (or disprove) arbitrage opportunities using bid and ask discount factors. We highlight the importance of liquidity risk through the LTCM case study, illustrating how price convergence trades can fail during market stress. You'll also master the calculation of discount factors from coupon-bearing bonds—similar to bootstrapping techniques—and how to replicate bond cash flows using combinations of other bonds. We wrap up with a look at STRIPS (Separate Trading of Registered Interest and Principal Securities) and the major day count conventions (Actual/Actual, 30/360, and Actual/360) used in the bond market. This chapter is fully aligned with the FRM fixed income curriculum, and is ideal for candidates seeking a clear and practical understanding of: • Bond pricing mechanics • Yield conventions and market practices • Arbitrage principles and risk considerations • Discounting, replication, and term structure • Real-world examples including STRIPS and liquidity traps Whether you're reviewing key formulas or trying to grasp core valuation logic, this chapter builds the foundation for mastering fixed income securities on the FRM exam.

Chapter 10: Interest Rates
Interest Rates, Spot Curves, and Benchmark Transitions | FRM Prep This chapter offers a comprehensive, curriculum-aligned overview of interest rate mechanics, yield curve construction, and benchmark rate transitions as tested in the FRM Part I exam. Covering both the theoretical foundations and practical applications of rates and curves, this chapter helps candidates gain a clear understanding of how interest rates shape the valuation of fixed income instruments and derivatives. We begin with discrete and continuous compounding, showing how different compounding frequencies affect investment growth and how nominal rates vary depending on the unit of measurement. From there, we explore spot rates, par rates, and forward rates, illustrating how these are interconnected and how to derive them using conceptual examples, including bootstrapping the spot curve. You’ll also learn to interpret the term structure of interest rates, including the properties of upward-sloping, downward-sloping, and flat yield curves, and how these impact the relationship between par, spot, and forward rates. We cover key curve movements like bull flattening, bear steepening, and more—highlighting what these imply for bond values and trading strategies. The chapter also dives into real-world market developments with a detailed explanation of the LIBOR transition, introducing newer, transaction-based benchmarks like SOFR, SARON, SONIA, ESTER, and TONAR. We close the chapter with an overview of interest rate swaps, explaining how fixed-for-floating swaps work, how cash flows are exchanged, and why swaps are widely used for hedging interest rate risk. Key topics include: • Discrete vs. continuous compounding • Spot, par, and forward rates • Bootstrapping and curve construction • Term structure shapes and bond trading implications • LIBOR phase-out and new benchmark rates • Interest rate swap fundamentals This chapter provides the core tools for understanding fixed income pricing, interest rate risk, and derivatives, all aligned with the FRM exam curriculum. It’s an essential foundation for mastering the quantitative side of financial risk management.

Chapter 11: Bond Yields and Return Calculations
Fixed Income Returns and Yield Analysis | FRM Prep This chapter is part of our FRM course and provides a complete, curriculum-aligned overview of fixed income return analysis. Through a series of clear and engaging FRM lessons, we walk you through essential topics such as realized return, bond spreads, yield to maturity, carry and roll-down, and a full P&L decomposition—exactly as presented in the official FRM curriculum. We begin by explaining how to calculate realized return, breaking it down into gross return (capital gains, coupon income, reinvestment income) and net return, which accounts for financing costs—a crucial concept for leveraged positions. Next, we explore how to calculate a bond’s theoretical value using discount factors derived from forward rates, and how to compute the spread when a bond is purchased below its market-implied value—an important measure of excess return. You’ll gain a strong understanding of yield to maturity (YTM) with step-by-step examples covering bonds, annuities, and perpetuities, along with key YTM properties like premium/discount pricing, par convergence, and how coupon rates interact with the term structure. This FRM lesson series also highlights the difference in yield conventions, showing how Japanese yields are calculated under a simple yield convention, while U.S. and European bonds follow compounded yield conventions that assume reinvestment. We then dive deep into the concept of carry and roll-down, first from a high-level viewpoint and then with more advanced examples that require revaluing bonds using forward rates. You’ll learn how to isolate the impact of cash carry and yield curve movement on bond performance. Finally, we conclude the chapter with a full-fledged P&L analysis, showing how to break down bond performance into: • Carry and roll-down • Rate change impact • Spread change impact Whether you're reviewing for the exam or building your foundational knowledge, this FRM prep module offers everything you need to master fixed income return attribution, bond pricing mechanics, and yield behavior—all critical areas of the FRM exam.

Chapter 12: Applying Duration, Convexity and DV01
Measuring Interest Rate Risk: DV01, Duration, and Convexity | FRM Prep Course This chapter of our FRM prep course offers a comprehensive, curriculum-aligned deep dive into interest rate risk measurement, with a focus on DV01 (Dollar Value of a Basis Point), duration, convexity, and their use in bond pricing, risk attribution, and hedging strategies. Tailored for FRM candidates, this content is built around real-world examples and the official FRM curriculum, helping learners master the most testable and practical aspects of fixed income risk management. We begin with the one-factor assumption, explaining how interest rate risk metrics like DV01, duration, and convexity rely on the idea that changes across the term structure can be driven by a single underlying factor. We clarify the difference between parallel and non-parallel shifts, highlighting key academic models like Vasicek and Hull-White. Next, we explore three methods of calculating DV01—including yield-based DV01, DVDZ (spot rate sensitivity), and DVDF (forward rate sensitivity). You'll learn how to compute DV01 for individual bonds and use it for hedging interest rate risk through position sizing and offsetting exposures. We then introduce effective duration, a measure of interest rate sensitivity expressed in percentage terms. You'll see how to apply it to both option-free and callable bonds, using weighted averages and probability-based logic. We compare effective duration with yield-based measures like modified and Macaulay duration, and explain how compounding assumptions (discrete vs. continuous) affect these metrics. The chapter also covers: • Convexity as a second-order risk metric that adjusts for the limitations of linear duration estimates • Positive convexity and how it reduces downside risk and enhances upside in volatile markets • The trade-off between full revaluation, duration-only, and duration-plus-convexity estimates • Hedging strategies using both duration and convexity, including two-instrument hedges for large parallel shifts We walk through how to compute portfolio-level DV01, duration, and convexity, emphasizing that DV01 is additive, while duration and convexity are calculated as market value-weighted averages—a concept often tested on the FRM exam. The final module compares bullet and barbell portfolios, showing how both structures can match a target effective duration, but differ in effective convexity. We explain when a higher convexity barbell portfolio is more beneficial (under parallel shifts) and when a lower convexity bullet portfolio is preferred (under non-parallel shifts or curve steepening/flattening scenarios). What You’ll Learn in This FRM Lesson Series: • How to calculate and interpret DV01, effective duration, modified duration, and convexity • How to construct hedged portfolios using DV01 and convexity-matching • How to analyze interest rate sensitivity at both the bond and portfolio level • How different portfolio structures (bullet vs. barbell) behave under rate shifts • How to apply duration and convexity to bonds with embedded options • The difference between yield-based and spot-rate-based sensitivity measures • Practical applications of fixed income risk metrics in portfolio management, asset-liability modeling, and regulatory stress testing

Chapter 13: Modeling Non-Parallel Term Structure Shifts and Hedging
This chapter of our FRM prep course is dedicated to Modeling Non-Parallel Yield Curve Shifts and Hedging—a high-impact and testable area within interest rate risk management. Through eight tightly structured, curriculum-aligned FRM lessons, you will learn how to analyze, interpret, and hedge against complex non-parallel movements of the yield curve using real-world frameworks such as Principal Component Analysis (PCA), Key Rate Duration (KRD), Forward Buckets, and both partial sensitivity and bucketing approaches. We begin with Principal Component Analysis (PCA), a powerful dimension reduction technique that allows you to isolate and understand the dominant drivers of yield curve changes—level, slope, and curvature. You’ll learn how to perform PCA using time-series spot rate data, calculate factor contributions, and apply this framework to Value at Risk (VaR) and Expected Shortfall (ES) using the parametric approach. We also guide you through calculating portfolio-level volatility based on PCA factor loadings. Next, we explore how to model non-parallel yield curve shifts directly through clustered bump-and-hump scenarios, using interpolated key rate shifts to quantify the portfolio’s response to movements in the short-, mid-, and long-term segments of the curve. You’ll then dive into Partial Sensitivity Analysis, also known as Key Rate Duration (KRD). We show how to decompose curve risk across individual maturities, construct hedges using KR01 values, and evaluate the effectiveness of hedges under correlated key rate movements. We also explain how regulators require firms to assess risk at ten different key rates and why managing—but not necessarily eliminating—risk exposure is the practical goal. The chapter also covers two contrasting approaches to curve sensitivity: • The bucketing approach, which applies parallel shifts within predefined maturity bands (short, mid, long), offering a simplified framework • The partial sensitivity approach, which accounts for more irregular, realistic curve distortions You’ll finish the chapter by mastering the forward bucket methodology, where you calculate bond price changes resulting from basis point shifts in time-segmented forward intervals. We then extend this analysis to compute Forward Bucket Durations—expressing the sensitivity in percentage terms using bond value normalization. What You'll Learn in This FRM Course Chapter: • How to use Principal Component Analysis (PCA) to identify the most important drivers of yield curve changes • How to calculate parametric VaR and Expected Shortfall using PCA factor exposures • How to model non-parallel shifts in the term structure using clustered bump scenarios • How to apply Key Rate Duration (KRD) for partial sensitivity analysis • How to build effective hedges across key rate exposures • How to differentiate between bucketing and partial sensitivity approaches • How to calculate and interpret Forward Buckets and Forward Bucket Durations • How to assess portfolio risk and hedging needs under realistic curve distortions • How regulators use key rate-based risk attribution in supervisory frameworks

Chapter 14: Binomial Trees
FRM Level 1 – Binomial Valuation and Option Pricing: Complete Chapter How are options valued using the binomial model? What is risk-neutral probability, and how does it relate to option pricing? This chapter provides a comprehensive walkthrough of binomial valuation techniques as applied to European and American options, aligned with the FRM Level 1 curriculum. Topics covered across the nine-video series include: • One-step and multi-step binomial tree construction • Derivation and application of risk-neutral probabilities • Valuation of European call and put options • Valuation of American put options with early exercise logic • Differences in systematic risk between options and underlying assets • Adjustments for options on stock indices, foreign currencies, and futures • Analysis of time-varying delta and its role in hedging The chapter also explores how the binomial model converges to the Black-Scholes price as the number of steps increases, and why the binomial method remains widely used in practice. This is a core topic within the FRM Level 1 Derivatives section, and this series is designed to strengthen both the conceptual foundation and the practical application of option pricing models.

Student Ratings & Reviews

5.0
Total 4 Ratings
5
4 Ratings
4
0 Rating
3
0 Rating
2
0 Rating
1
0 Rating
NA
nasim akhtar
2 months ago
I came across prepvisuals videos on YouTube and I was immediately impressed. The videos are very crisp, yet detailed and visuals are very quality. I spoke with the creator and it was evident that she is doing this as a passion and not really as a business so thus the videos clearly shows the high quality. A simple compare with competitors like Kaplan would clearly show the efforts that actually have gone in making these videos. I am very glad I came across the videos and this is a very good buy. I recommend the course without any reservations.
KM
Keresztes Marta
2 months ago
Each video is short and fully animated in line with the examples in the FRM curriculum. Makes it easy to keep focused. Very high quality content!
A
Ale
5 months ago
This course is mind-blowing. It walks you through each chapter in a clear and entertaining way, with real life examples that make even the most theoretical concepts easier to comprehend. Each example is visualized, broken down, and contextualized to the key concepts. I found it to be a game changer in my preparation especially for the most complex chapters and would definitely recommend it to anyone preparing for the FRM.
AF
Agnes Fustos Makar
12 months ago
Clear and concise content. Saves a lot of time